Small Business Chapter 13

Since the goal of a small business Chapter 13 bankruptcy is to repay most debts, it can be an advantage to a small business owner that has the means to make the payments. During the repayment period, the business is retained by the owner and allowed to continue to operate as a means to make repayment. This can be a significant advantage over Chapter 7 bankruptcy where any assets of the small business – including the business itself – could be used to satisfy the debt to creditors.

During the Chapter 13 repayment period, the small business owner will have time to sell assets that are no longer need or that cannot afford to be kept. As with all bankruptcies, the automatic stay is in force throughout the repayment period and the business can restructure their assets without fear of harassment or collections.

In a small business Chapter 13 bankruptcy, the small business owner will have an opportunity to modify or renegotiate the payment terms on secured debts such as property mortgages or equipment loans.

At the end of the repayment period, any debts that could not be repaid through the small business Chapter 13 repayment plan will be discharged, that is, eliminated.

While the repayment period can be shortened if all repayment has been made, Chapter 13 repayment plans cannot be extended longer than 5 years. This can mean that larger amounts of debt may be difficult to repay, and a Chapter 11 bankruptcy must be considered.