Deciding to file for small business bankruptcy is not an easy decision. You must determine if staying in business is even an option (if not, chapter 7 bankruptcy may be your best option). Then you must determine which chapter you wish to file under. This part of your decision – one full of possible misinformation and legal complexities – is best made with the assistance of a skilled and experienced bankruptcy attorney. However, you can begin to consider your options by using the following comparison and information on chapter 11 and chapter 13 bankruptcies.
Chapter 11 and Chapter 13 Bankruptcy Similarities
Both considered a “reorganization” of your debt, chapter 13 and chapter 11 bankruptcy plans have a number of similarities. Each allows you to retain the property you need to continue your business (up to a certain value) while allowing you time to sell un-exempt assets to be placed toward your bankruptcy estate. Furthermore, each offers you the chance to pay back your creditors on an approved payment plan that is more manageable than your current obligations. Once you have fulfilled the terms of that plan, your eligible debts can be discharged and you will no longer be held liable.
Chapter 11 and Chapter 13 Bankruptcy Differences
Chapter 13 bankruptcy is available to sole proprietors and individuals who wish to restructure their debts (not available for LLCs, corporations, or other business entities). The time frame for repaying your debt is non-negotiable, unless you are able to pay them back sooner than predicted, and there is a limit to the amount of debt you are permitted to have under this bankruptcy chapter.
In contrast, chapter 11 bankruptcy offers more flexibility to business owners, particularly the time frame over which you may repay your debts. Nearly anyone can file under this chapter, and the debt limitation amount is much higher than in chapter 13 bankruptcy. However, this option is much more complex and carries a greater cost. For this reason, many small businesses and sole proprietors opt to file for chapter 13 bankruptcy, whenever it is possible.
Get Skilled Legal Assistance with Your Business Bankruptcy
Regardless of the size, type, or debt amount of your small business, it is critical that you seek skilled legal assistance with your chapter 11 or chapter 13 bankruptcy. Known for handling some of the toughest and most complex business bankruptcy cases, the Law Offices of Eric Zelazny have more than two decades of experience in helping small businesses restructure their debt and get back on their feet. To inquire about your unique situation, schedule a free, no obligation consultation today. Call our Tinley Park small business bankruptcy lawyers at 708-888-2299.