Owning a small business can come with several challenges, especially when it comes to navigating difficult financial situations. Because of this, you may want to consider Chapter 13 bankruptcy for business owners if you are struggling to manage your business-related debt.
At Grady BK, PLLC, our goal is to help our Watertown clients navigate the bankruptcy process in a knowledgeable and confident way. We understand how overwhelming the idea of bankruptcy can be, especially for business owners, which is why we will help you every step of the way. We can help you decide whether or not Watertown, NY, small business bankruptcy is the right fit for your situation, and if so, we can assist you in starting the filing process. In this article, we will be discussing Chapter 13 bankruptcy for business owners and why this may be beneficial.
How Chapter 13 Bankruptcy Works
Before we dive into how Chapter 13 bankruptcy works for business owners, we need to discuss what Chapter 13 actually does. Chapter 13 bankruptcy and Chapter 7 are often compared to one another, but they are quite different.
Chapter 13 bankruptcy works by allowing you to create a repayment plan for personal or business debt relief. This is different from Chapter 7, which will discharge many of your debts once you have filed.
With a Chapter 13 repayment plan, you will be required to make monthly payments towards your debts over the course of a 3 to 5-year plan. The biggest benefit of this is that the payment plan will be created according to your income, and you will have protection from creditors through an automatic stay. Because of this, creditors will not be able to pursue any collection activities as you are on your repayment plan.
Chapter 13 bankruptcy is an option people usually choose when their income is too high to qualify them for Chapter 7 bankruptcy.
Is Chapter 13 a Good Option For Small Business Owners?
Generally speaking, Chapter 13 bankruptcy is a good option for New York small business owners who have accumulated more debt than they can pay off on their own. It is the next best option if you do not meet the requirements for Chapter 7 bankruptcy.
Something to keep in mind is that corporations, limited liability companies, and partnerships will not be able to file a Chapter 13 case. This is an option that is only available to sole proprietorship companies..
When you are self-employed or own your own business, you will most likely also have extra reporting requirements throughout your Chapter 13 repayment plan.
Benefits of Chapter 13 for Small Business Owners
Filing for Chapter 13 bankruptcy for business owners is never an easy decision, but it may be a necessary step to take. Debt restructuring in New York is a much better option than trying to manage significant debts on your own, which can result in a variety of collection efforts from creditors.
If you think Chapter 13 may be the right fit for your situation, here are some additional benefits to consider:
- Asset protection: Depending on the type of business you have, you most likely have a variety of business assets that are essential for how your business runs. When you file for Chapter 13 bankruptcy, you will be able to maintain your assets since you will be on a repayment plan to manage your outstanding debts.
- Protection from creditors: When you file for Chapter 13, an automatic stay immediately takes effect, protecting you from any collection efforts from your creditors. When this happens, you won’t have to worry about creditor harassment, foreclosures, property seizures, or wage garnishment.
- Prioritizing debts: When your Chapter 13 repayment plan is created, you will have the ability to prioritize certain debts. This can help you focus more on certain debts that are stacking up, such as past-due payments on business loans.
- Realistic plan: A Chapter 13 bankruptcy plan evaluates your income, expenses, and disposable income when creating your monthly payments. Because of this, you are guaranteed a realistic monthly payment that you will be able to make so that you can get on top of your debt.
Even though Chapter 13 comes with many benefits, it is still a good idea to get the assistance of a bankruptcy attorney in Watertown, NY. A bankruptcy attorney will have experience in the different bankruptcy options available for business owners and can help you find the right fit for your situation and financial goals.
FAQ Section
Can I keep my business running while in Chapter 13?
You will be able to continue running your business when you file for Chapter 13 since your assets will not be seized.
How long does a Chapter 13 repayment plan last?
When a repayment plan is being created for you, you will have the option of either a 3 or 5-year plan, depending on the extent of your debts and how high your monthly payment can be.
What debts can be included in Chapter 13?
A Chapter 13 repayment plan for small business owners can include debts, such as credit card balances, medical bills, unpaid invoices, utility bills, etc.
Will Chapter 13 stop a lawsuit from creditors?
In most cases, filing for Chapter 13 will stop a civil lawsuit from creditors when the automatic stay is put into effect.
Watertown’s Top Compassionate Bankruptcy Attorney
Are you having trouble deciding if a Chapter 13 repayment plan is the right fit for your small business? At Grady BK, PLLC, we can help you navigate the bankruptcy process, whether you are still deciding on bankruptcy or are ready to file. Having a New York attorney on your side can equip you with the knowledge you need to proceed with confidence and peace of mind.
At Grady BK, PLLC, we provide a personalized approach for our Watertown clients, taking into account their specific financial situation. This includes tailoring our services for small businesses since you will have unique financial needs and goals.
Contact us today at 315-299-9005 to discuss your financial situation with a bankruptcy attorney in Watertown, New York. Our team at Grady BK, PLLC, is here to provide you with the legal assistance you need as you begin the process of filing for Chapter 13.
