Louisville Business Bankruptcy Lawyers
Chapter 13 For Business
Starting a business can be tough, and keeping it afloat can be even more difficult. In our experience, Chapter 13 business bankruptcy can benefit the owners and principals of small businesses, partnerships and LLCs. To learn how our focus on bankruptcy can help you salvage your company or help you get out from under a crushing personal guarantee of business debt, contact one of our bankruptcy attorneys at O’Bryan Law Offices in Louisville, Frankfort or New Albany today.
In some cases, we can find a way to keep your company in business through a debt repayment plan. In other situations, we can show you that the business entity is not worth saving, and we’ll concentrate on minimizing your exposure to personal liability. Where the distinction between business and personal assets has been reasonably well-preserved, it might make sense to file separate bankruptcy cases for the business and the individual.
At O’Bryan Law Offices, our clients include building contractors, landscapers, retailers, restaurateurs, licensed professionals, and people engaged in all construction trades. We assist in resolving debt problems such as the following:
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as a wage earner’s plan, allows individuals with a regular income to create a plan to repay all or part of their owed debts. With the help of a bankruptcy attorney, debtors will propose a plan to make payment installations to creditors over a period of 3-5 years.
Only if the individual’s current monthly income falls below the state median will the plan be for 3 years, unless the court grants a longer period for good cause. In Kentucky, the applicable state median income for one person in 2020 is $49,041. In Indiana, it is $51,689.
In the case that the debtor’s monthly income is greater than the applicable state median income, the plan will generally occur over a period of 5 years. There is no case under Chapter 13 bankruptcy where the payment plan can last any longer than 5 years.
How Does Chapter 13 Bankruptcy Work for Businesses?
Individuals and sole proprietors looking to reorganize their personal or small business debts may often choose to file bankruptcy under Chapter 13. It is possible to file for bankruptcy on your own, but due to the sheer amount of laws, exceptions, and legal jargon, it is best to hire an experienced bankruptcy attorney.
Your attorney will file all the necessary paperwork with the court, including but not limited to schedules of assets and liabilities, current income and expenditures, executory contracts and unexpired leases, and a statement of financial affairs.
The debtor must also provide the following information:
- Source and amount of income
- List of all creditors and the amounts/nature of their claims
- List of all property
- Detailed list of monthly living expenses
- For example, food, clothing, utilities, taxes, shelter, transportation, medicine, etc.
Once Chapter 13 is successfully filed, almost all collection actions against the debtor are automatically put on hold. This “stay” may only be effective for a short time, but can be extremely beneficial to the debtor. As long as this stay is in effect, creditors cannot initiate or go forward with lawsuits or continue to demand payments. This stay also applies to house payments, which can save your home from foreclosure.
What are the Benefits of Filing a Chapter 13 Bankruptcy for my Business?
There are a number of reasons why someone might choose Chapter 13 for business bankruptcy over Chapter 7. The most obvious reason may be that they want to keep their assets and avoid foreclosing their business property.
By filing this chapter as opposed to liquidation under Chapter 7, debtors can stop foreclosure proceedings and may work to cure delinquent payments over time. This allows them to keep their business up and running while working to repay their debts by other means aside from liquidating their business assets as a way to repay them.
Another benefit of Chapter 13 for businesses is that it allows business owners to reschedule secured debts and extend them throughout the life of their bankruptcy plan which can help lower the payments.
In addition, under Chapter 13, debtors will have no direct contact with creditors. The payment plan acts like a consolidation loan in which the individual makes payments to a trustee, who will then distribute the money to creditors.
Contact One of Our Experienced Kentucky Business Bankruptcy Lawyers Today
If you feel like you’re drowning in debt, you are not out of options. There are options available to you, including filing for Chapter 13 bankruptcy. At O’Bryan Law Offices, we are a debt relief agency. We help people file for relief under the Bankruptcy Code. For dependable advice about business bankruptcy options for small business owners, contact one of our knowledgeable lawyers at O’Bryan Law Offices for a free consultation.