Getting trapped in a vicious debt cycle is not unusual in a difficult economic climate. It isn’t always the fault of the small business owner. Where once his/her business was thriving, it may now be suffering not because of something they did or didn’t do, but due to the local economy. A Small Business Bankruptcy Attorney helps small business owners with debt solutions and relief. You have a couple of bankruptcy options at your disposal for small business that will be outlined in the following information.
Chapter 13
A Chapter 13 bankruptcy can be used for a sole proprietor or small business organization. The first requirement is that the business owner must have a regular income. This is to ensure they can make the payments under this plan. It also requires a business owner to have a certain amount of debt in order to file. The payment plan is set up to be paid off within three to five years, with court approval, not creditor approval, in a Chapter 13. The payment plan should be affordable if you have a regular income. This bankruptcy is more palatable to small business owners if they meet the requirements of the plan.
Chapter 11
Chapter 11, like Chapter 13 can be used by a sole proprietor. This kind of bankruptcy is considered a reorganization just like a Chapter 13, with a different set of rules and regulations. It allows the sole proprietor to pay back the money they owe to debtors over a reasonable amount of time with affordable payments. The time frame for paying back creditors is not restricted to three to five years. Creditors may have to approve of the repayment structure with this type of bankruptcy. Chapter 11 comes with a higher expense, but could be a solution when you are not eligible for a Chapter 13.
Certain requirements and restrictions apply to all forms of small business bankruptcies. This is why a hiring a Small Business Bankruptcy Attorney would be a wise decision. Your attorney can help you make sense of the bankruptcy laws and how this process will affect you. Their guidance will take a lot of stress off you whether you choose a Chapter 11 or a Chapter 13. Many factors have to be considered beyond the restrictions and requirements. Click Here for more information.
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