Throughout the posts in this blog, we have discussed the differences between Chapter 7 and Chapter 13 bankruptcy, as they apply to people in Eugene and elsewhere. These types of bankruptcy are known as personal bankruptcies, which are filed by people for their own personal debt. However, if you are a small business owner who is experiencing debt problems related to your personal life or business, or both, you might consider filing for Chapter 13. At (The Law Office of Kim Covington, we are prepared to answer the questions small business owners may have when it comes to reducing overwhelming debt and saving their company.
Can your business be saved if you file for Chapter 13? In order to qualify, your business should not be considered a separate legal entity, such as a corporation. In other words, you will need to have sole proprietorship of the business and cannot file Chapter 13 for your business in its own name, according to the Administrative Office of the U.S. Courts. Owners of separate legal entity businesses would otherwise seek a Chapter 11 bankruptcy.
A Chapter 13 bankruptcy for your business would work in the same way as if you filed for personal reasons – meaning that you restructure your debt and work out a manageable repayment plan with your creditors, usually taking between three to five years to complete. If you file for a personal Chapter 13 bankruptcy, you may also include your business debts if you are the one personally liable for them.
Chapter 13 may give you vital time to satisfy your creditors and keep assets important to your business. During this time, you may continue to grow your company and help it succeed. Learn more about debt relief options for your small business by visiting our business bankruptcy page.