Chapter 13 bankruptcy is a lesser-known bankruptcy type that is available for individuals and self-employed business owners. Here are the details:
Chapter 13 Bankruptcy Overview
Chapter 13 is an individual bankruptcy. A business cannot file Chapter 13 bankruptcy under a business name. The individual Chapter 13 bankruptcy sets up a payment plan for the debtor over three to five years, and it includes an automatic stay, prohibiting creditors from collecting during that time. Chapter 13 also prevents foreclosure during the repayment period.
You Might Want to Consider Chapter 13 If:
- You own a sole proprietorship which has value and you don't want to liquidate it in a Chapter 7 bankruptcy
- You have enough income, from self-employment and other sources, to provide for your basic living expenses and also make the court-required payments on your debts
- Your unsecured debts are less than $336,900 and your secured debts are less than $1,010,650
- You filed Chapter 7 bankruptcy within the last six years (if this is the case, you must file Chapter 13 bankruptcy).
Disclaimer: This article, and the information on this Guide Site, is intended for general information only. The author is not a CPA, tax attorney, or Enrolled Agent. Consult with your tax professional for information relating to your specific situation.
