Small Business Reorganization-Chapter 13

If a small business owner is having difficulty in meeting the business debt obligations, the business owner may, if qualified under Chapter 13 of the bankruptcy code file a petition to reorganize their business. Chapter 13′s are complex therefore the business owner should seek the counsel of a bankruptcy attorney.

General eligibility requirements for filing a Chapter 13 for an individual business owner are: (1) the business cannot be incorporate or a partnership; (2) unsecured debt cannot exceed $360,475 and secured debt cannot exceed $1,081,400, these amounts are adjusted periodically; (3) receive credit counseling from an approve counseling agency within 180 days of filing; and (4) there hasn’t been a previous dismissal of a Chapter 13 petition within 180 days of the new filing due to debtor’s willful failure to appear in court, failure to obey court orders, or a voluntay dismissal of the previous petition after a creditor attempt to gain relief from the court on secured property.

In addition to the petition the business owner will have to file schedules that will fully disclose their financial condition such as, schedules disclosing all their assets and liabilities, current income and both business and personal expenses, all contracts to be performed including unexpired leases and a statement of financial affairs. A plan of reorganization will also be required.

Assuming the plan of reorganization is approved by the court, the business owner will have three to five years to complete the plan. For specific details of how a Chapter 13 filing can help a small business owner, the owner should seek the counsel of a bankruptcy attorney.