Basics of Chapter 13 Bankruptcy for Business Owners

Posted by on Apr 10, 2013 in Uncategorized | 0 comments

Filing for bankruptcy is never an easy decision, but it can be the best way to help you get through your monetary struggles, especially if you are a small business owner. As a business owner, Chapter 13 bankruptcy may be able to help you manage many of your business-related debts. Once you have begun the process of filing for Chapter 13 bankruptcy, you will need to procure a number of documents in order to have your bankruptcy petition processed smoothly. Among these documents are:

  • A list documenting your monthly income and expenses
  • Financial affairs statement
  • Your most recent tax return
  • A schedule of income and expenditures
  • A schedule of executory contracts, along with leases that have not expired
  • Proof of income (if you have been paid in the 60 days after you have filed for bankruptcy)

After submitting these necessary documents, a possible repayment plan that will work for you and the creditors will be determined. After a proper repayment plan has been agreed upon, there are many ways in which you can make these payments, including through the following forms of payment:

  • Monthly income, wages, or any business profits
  • Rents or royalty earnings
  • Monetary support from alimony or child support
  • Social security benefits
  • Pensions

Most repayment plans for Chapter 13 bankruptcy require the debtor to pay the creditors based on a three to five year payment plan, provided they have a steady income and make regular payments monthly. As a result, Chapter 13 can be a better alternative to the liquidation process that debtors will likely go through when pursuing Chapter 7 bankruptcy. Because Chapter 13 bankruptcy organizes a payment plan for debtors, allowing them to slowly pay off their debts over a longer period of time, it not only helps them address their financial issues, but also does so without putting their property and assets at risk of being seized or sold. However, like any bankruptcy, Chapter 13 bankruptcy is something that should be carefully considered before a person files for it.

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