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Can I Keep My Biz After Filing Ch. 13 Bankruptcy?

  • Chapter 13 bankruptcy allows you to keep your business while reorganizing debts.
  • You create a repayment plan and benefit from protections like an automatic stay on collections.
  • Call The Credit Pros for personalized advice on managing your business and exploring all options.

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Related content: What Happens to My LLC if I File Personal Bankruptcy

Keep your business after filing Chapter 13 bankruptcy. This option lets sole proprietors restructure debts while running their operations. You'll make a 3-5 year repayment plan, control your business, and maybe save it from foreclosure.

Chapter 13 differs from Chapter 7. It lets you keep assets and reorganize debts. An automatic stay stops creditor collections, giving you some breathing room. You need regular income and debts under certain limits to qualify. Talk to a bankruptcy attorney to navigate the tricky parts.

Your best move? Call The Credit Pros now. We'll check your full 3-bureau credit report and give you personalized advice. We'll help you choose between Chapter 13 and other options for your business and financial future. Don't wait - your livelihood's on the line.

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    Can I Keep My Business Open After Filing Chapter 13

    Yes, you can keep your business open after filing Chapter 13 bankruptcy. Chapter 13 allows you to restructure your debts with a 3-5 year repayment plan while continuing to operate your business. This option is available for sole proprietors with regular income and debts under $2,750,000.

    By choosing Chapter 13, you avoid asset liquidation, which helps protect your business. You get protection from foreclosure, the ability to reschedule secured debts, and potential safeguarding of co-signers.

    To maintain your business during Chapter 13, you need to:

    • Make all mortgage and plan payments on time to the appointed trustee
    • Stick to the approved repayment schedule
    • Continue generating regular income to qualify and meet obligations

    Remember, Chapter 13 is only for individuals, not corporations or LLCs. If you own part of an LLC or corporation, filing Chapter 13 can help protect that ownership interest from liquidation.

    As a final point, by staying focused on your repayment plan and maintaining your income, you'll be on the path to financial recovery while keeping your business alive.

    How Does Chapter 13 Affect Sole Proprietorships

    Chapter 13 bankruptcy offers you, as a sole proprietor, a lifeline to keep your business afloat while restructuring debts. You can continue operating and retain assets through a 3-5 year repayment plan, allowing you to catch up on secured debts like mortgages and potentially discharge some unsecured debts.

    Since your personal and business finances are intertwined, Chapter 13 addresses both, giving you a chance to reorganize all your debts holistically. You will need to commit disposable income to repay creditors, which may strain your cash flow. However, you can protect essential business equipment and property through exemptions.

    Key benefits include:
    • Debt relief and protection from creditor actions
    • Ability to continue business operations
    • Opportunity to save your home from foreclosure

    Downsides involve:
    • Strict budget oversight
    • Potential repayment of significant debt amounts
    • Negative impact on credit

    Your eligibility depends on debt levels and income. We recommend consulting a bankruptcy attorney to evaluate if Chapter 13 suits your situation as a sole proprietor. They can help determine if it provides the best path to resolving financial issues while preserving your livelihood.

    To put it simply, Chapter 13 allows you to keep your business running while managing debts, but it's crucial to seek professional advice to navigate the complexities.

    What Types Of Businesses Can File Chapter 13

    Chapter 13 bankruptcy is primarily for individuals, including sole proprietors. If you're a sole proprietor, your business can file Chapter 13. This means freelancers, independent contractors, and small unincorporated businesses run by one person qualify. However, partnerships, corporations, and LLCs can't directly file Chapter 13.

    For non-sole proprietors, you have other options:

    • You can file personal Chapter 13 to reorganize individual debts, which might free up resources for your company.
    • Consider Chapter 11 Subchapter V, which offers similar debt restructuring benefits for small businesses.

    Key benefits of Chapter 13 for eligible businesses include:

    • You can keep your assets while restructuring debts.
    • Repay over 3-5 years through a court-approved plan.
    • Protect essential business equipment through exemptions.
    • Potentially discharge qualifying business debts upon plan completion.

    In short, if you qualify, Chapter 13 can help you manage debt while keeping your business running. We recommend consulting a bankruptcy attorney to explore your options and determine the best path for both your business and personal finances.

    Will I Lose Business Assets In Chapter 13

    You won't lose your business assets in Chapter 13 bankruptcy. You can keep operating your business while restructuring your debts.

    You'll create a 3-5 year repayment plan using your disposable income. The bankruptcy trustee oversees this but doesn't take control of your business assets. You'll maintain ownership of your equipment, inventory, and other resources needed to generate income. However, you'll need to use your earnings to pay creditors according to the court-approved plan. The value of non-exempt property factors into required payment amounts, and secured debts tied to specific collateral get priority treatment.

    Chapter 13 lets you:

    • Reorganize your debts
    • Protect your business assets from liquidation
    • Potentially achieve long-term financial stability

    We understand this is a stressful situation. Chapter 13 provides a way to keep your business running while addressing financial challenges. You'll need to live below your means during the repayment period, but you can emerge with your business intact if you stick to the plan's terms. To finish, remember that this path allows you to keep operating and potentially achieve long-term stability.

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    How Does Chapter 13 Differ From Chapter 7 For Business Owners

    Chapter 13 and Chapter 7 bankruptcy offer different paths for business owners. With Chapter 13, you keep your business and restructure debts through a 3-5 year repayment plan. This lets you catch up on missed payments for secured debts like mortgages or vehicle loans. In contrast, Chapter 7 involves liquidating non-exempt assets, potentially including business assets, to repay creditors. It also discharges qualifying debts more quickly, usually within 3-4 months.

    Eligibility differs between the two. Chapter 13 has debt limits but no income restrictions, making it accessible if you have a higher income. Chapter 7 requires you to pass a means test based on your income. While Chapter 13 provides more flexibility to continue operating your business, Chapter 7 may require closing it.

    Key differences:

    • Asset retention: You keep assets with Chapter 13; Chapter 7 may require liquidation.
    • Debt repayment: Chapter 13 involves a structured plan; Chapter 7 eliminates most unsecured debts.
    • Timeline: Chapter 13 lasts 3-5 years; Chapter 7 completes in 3-4 months.
    • Business continuity: Chapter 13 allows continued operation; Chapter 7 often leads to closure.

    Your choice depends on your financial situation, business goals, types of debt, and desire to retain assets versus seeking faster debt discharge. We recommend consulting a bankruptcy attorney to determine the best option for your specific circumstances.

    In essence, understanding the differences between Chapter 13 and Chapter 7 will help you make an informed decision that aligns with your financial goals and business continuity.

    Can I Operate My Llc Or Corporation In Chapter 13

    No, you can't operate your LLC or corporation directly in Chapter 13 bankruptcy. Chapter 13 is only for individuals. However, you have options:

    1. File personal Chapter 13 if you've guaranteed business debts:
    • Allows a 3-5 year repayment plan
    • Covers personal and business-related debts you've guaranteed
    • Keeps your business separate and unprotected

    2. Consider alternatives for your business:
    • Chapter 7 liquidation
    • Chapter 11 reorganization

    3. Evaluate impacts on your:
    • Ongoing operations
    • Asset protection
    • Creditor relationships

    4. Consult a bankruptcy attorney to:
    • Explore all options
    • Understand personal vs. business bankruptcy implications
    • Create a strategy that protects you and your business

    To wrap up, while you can't include your LLC or corporation in Chapter 13, you may still find ways to address both personal and business financial challenges. Seek professional advice to find the best path forward.

    What Are The Advantages Of Chapter 13 For Business Owners

    As a business owner, you can benefit from several key advantages when filing for Chapter 13 bankruptcy:

    You'll be able to reorganize both your personal and business debts into a manageable 3-5 year repayment plan. This allows you to keep your business equipment and property while paying off debts. Your business can continue operating during bankruptcy, enabling you to generate income.

    When you file for Chapter 13, an automatic stay goes into effect. This means creditors must stop their collection efforts, giving you some breathing room. After completing your repayment plan, any remaining qualifying debts are forgiven. You'll also have the opportunity to prioritize essential business-related secured debts first.

    Chapter 13 can potentially help you reduce or eliminate credit card balances and overdue invoices. By successfully completing the plan, you can put your business on firmer financial footing.

    However, we want you to be aware of some limitations:

    • Chapter 13 is only available for individuals and sole proprietors with regular income
    • Strict debt limits apply
    • You must have sufficient income to support plan payments

    For some small businesses, alternatives like Chapter 11 Subchapter V might be more suitable. We recommend that you consult with a bankruptcy attorney to determine the best option for your unique situation.

    On the whole, Chapter 13 can offer you a path to debt relief and business continuity, but it's crucial that you weigh the pros and cons carefully before proceeding.

    Will Creditors Stop Collecting During Chapter 13

    Yes, creditors will stop collecting during Chapter 13 bankruptcy. When you file, an automatic stay takes effect, halting all collection efforts. This includes:

    • Foreclosures
    • Repossessions
    • Wage garnishments
    • Harassing calls and letters

    The automatic stay allows you to reorganize your finances without creditor pressure. It lasts throughout your 3-5 year repayment plan. However, understand that:

    • Debts are restructured, not eliminated
    • You will make monthly payments to a court-appointed trustee
    • The trustee then distributes funds to creditors according to your plan

    There are exceptions. Creditors can ask the court to lift the stay in certain situations. Also, debts like child support may still need timely payments.

    Dealing with overwhelming debt is stressful. Chapter 13 provides immediate relief from collections while you work towards financial stability. Bottom line, you're not alone. A bankruptcy attorney can guide you through this process, ensuring you're fully protected.

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    Can Chapter 13 Save My Business From Foreclosure

    Yes, Chapter 13 can save your business from foreclosure. Here's how:

    When you file for Chapter 13, you immediately stop foreclosure proceedings with an automatic stay. This gives you some breathing room to plan your next steps.

    You get a repayment plan to catch up on missed mortgage payments over 3-5 years while keeping your business operational. This way, you can address your debt without shutting down.

    Chapter 13 lets you restructure secured debts, possibly lowering your monthly payments. If your property is worth less than your first mortgage, you can remove second mortgages through second mortgage stripping.

    To be eligible, you need a regular income and total debts under $2,750,000.

    Remember:
    • You must keep up with ongoing mortgage payments during the plan.
    • Your income should cover both missed and current payments.
    • The automatic stay is temporary, so follow the plan to avoid foreclosure.
    • Chapter 13 is best for those with a steady income.

    At the end of the day, consulting a bankruptcy attorney is crucial to see if Chapter 13 fits your situation. It's powerful but requires careful planning and commitment.

    What Are The Eligibility Requirements For Chapter 13

    To qualify for Chapter 13 bankruptcy, you need to meet several eligibility requirements. Here's what you should know:

    You must have a regular income to cover your living expenses and repayment plan. This income can come from various sources, including wages, self-employment, pensions, or Social Security. If you're married, you can use your spouse's income as well.

    Your debts need to fall within certain limits. You should have unsecured debts under $419,275 and secured debts below $1,257,850. It's important that you haven't had any recent bankruptcy filings, typically within the last 2-4 years, depending on the type.

    Before filing, you need to complete a credit counseling course and ensure your tax filings are current. You also can't have had any previous dismissals for specific reasons.

    To be eligible, you must prove you have sufficient disposable income after subtracting allowed expenses. Your repayment plan will last 3-5 years, and if your income exceeds the median, it must be 60 months. You'll need to provide financial documentation and stay compliant with the plan terms.

    Chapter 13 offers several benefits, including:

    • Keeping your assets
    • Catching up on missed payments
    • Protection from creditors

    It's often chosen by individuals with regular income who want to protect their property or don't qualify for Chapter 7. Remember, while businesses can't file Chapter 13, you as a business owner can include personal liability for business debts in your individual filing.

    Lastly, we recommend you consult with a bankruptcy attorney to fully understand your eligibility and the implications of filing Chapter 13. They can help you navigate the complex requirements and ensure you're making the best decision for your financial future.

    How Does Chapter 13 Impact My Business'S Taxes

    Chapter 13 bankruptcy significantly impacts your business's taxes. You'll need to file all required tax returns during your repayment plan. This includes income, payroll, and other business taxes. Your plan must cover priority tax debts in full, like recent income taxes or payroll taxes. Older tax debts may be partially discharged.

    During Chapter 13:
    • You keep operating your business.
    • You pay ongoing taxes as they come due.
    • Back taxes get rolled into your repayment plan.

    The bankruptcy trustee oversees your tax payments. They ensure you're meeting obligations and staying current. This helps prevent new tax problems while resolving old ones.

    Chapter 13 can offer tax benefits:
    • Stop IRS collection actions.
    • Potentially reduce penalties and interest.
    • Spread out tax payments over 3-5 years.

    However, it's crucial to stay compliant. Failing to file returns or pay new taxes can jeopardize your bankruptcy. We recommend working closely with a tax professional throughout the process. They can help you navigate complex requirements and maximize potential benefits.

    Finally, by addressing tax issues systematically through Chapter 13, you can get back on track financially and set your business up for future success.

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