Can you keep your sole proprietorship in a chapter 13 bankruptcy?

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Question:

We have been struggling to keep our business afloat for a few years, but the level of debt has become unreal. If we file a chapter 13 can we keep our doors open?

Answer:

Yes, absolutely. Chapter 13 offers smaller, unincorporated business owners the opportunity to relieve themselves and their business of overwhelming debt while helping to keep the business running and get it back into a solvent state.

Filing for chapter 13 bankruptcy is one way to keep your sole proprietorship if you are struggling to pay the bills for your business. This is largely because you can save most of your assets through this chapter, as long as you create a payment plan that is approved by the bankruptcy trustee.

What this means is that you will not lose any equipment or property that you need for your business, unlike chapter 7 bankruptcy. In this way, chapter 13 bankruptcy has the same benefits for sole proprietorships as chapter 11 does for corporations and partnerships, as both chapters allow companies to stay in business while repaying creditors. However, a chapter 13 is far less complex and less costly to file and complete.

You will need to make a payment plan that outlines the amount you will pay creditors for the next three to five years. In addition, your secured debt has to be under $1,081,400, while your unsecured debt must be less than $360,475. If you are unsure whether chapter 13 bankruptcy is the best option for you, contact a lawyer.

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