If you own a business and are overwhelmed by debt with no feasible path to repay what you owe, you may be considering bankruptcy. While many businesses are not entitled to file for a Chapter 13 bankruptcy, individuals who are self-employed debtors can utilize this route to reorganize while remaining open.

A Madison Chapter 13 business bankruptcy lawyer can assess your legal needs and help you determine the best path forward. Our hard-working business bankruptcy attorneys regularly advocate for distressed business owners and can help you stop harassing creditor calls and develop a strategic financial reorganization plan.

Chapter 13 Bankruptcy for Individual Business Owners

Individuals often use Chapter 13 bankruptcy to reorganize and restructure debt, but it can also be an option for some business owners. Neither corporations nor partnerships can file for a Chapter 13 bankruptcy, but a sole proprietor typically can.

Sole proprietors can use a Chapter 13 business bankruptcy to reorganize debts, including business debts, into a repayment plan while remaining open. Individual business owners who have entered into a plan of reorganization may not incur new debt without first receiving approval from the court, nor can they apply for new lines of credit while the case is underway.

A debtor under a court-approved reorganization plan will pay the Chapter 13 business bankruptcy trustee every month. The trustee will then pay that money to the creditors according to the terms of the plan. Once the plan is concluded, the bankruptcy court will discharge any unsecured and still outstanding debts.

A Chapter 13 plan of reorganization typically takes place over three to five years. A Madison business bankruptcy attorney can help with your Chapter 13 case and work with you and your business’s creditors to develop a reorganization plan.

Our attorneys can help you save key business assets, such as furniture and equipment, to keep your business running. Many debtors who reorganize under a Chapter 13 case do not fully repay their creditors. We will also negotiate with remaining creditors to reorganize your debts into the right payment plan for your business needs.

Possible Benefits of Chapter 13 Business Bankruptcy

One of the key benefits available to debtors after filing for a Chapter 13 business bankruptcy is that creditors may not seize their assets. This is what is known as an automatic stay, which prevents creditors from taking actions to collect debts without receiving approval from the court.

An automatic stay protects assets you can use to repay debts in the future while also giving you sufficient time to propose and initiate a reorganization plan. An individual business owner filing for a Chapter 13 bankruptcy can keep the business up and running while adhering to the terms of the reorganization plan.

Any debt on unsecured claims is frozen once a Chapter 13 action is initiated so interest and fees do not accrue on the balance. In addition to asset protection and preservation, a Chapter 13 bankruptcy for a small business owner allows you to mitigate your personal liability from debts tied to your business.

You can enter into a structured payment plan that is flexible to your business needs. Many small business owners have their personal and business assets closely intertwined, but a Chapter 13 reorganization plan may enable you to modify loans such as mortgages and car loans. Our Madison Chapter 13 business bankruptcy attorneys can guide you through the process and explain your best filing options.

Call a Madison Chapter 13 Business Bankruptcy Attorney

Because a Chapter 13 bankruptcy establishes a payment plan to pay down what you owe and discharge your debt while maintaining assets that help your business run, individuals who are self-employed or operate an unincorporated business may find this a viable option. A Madison Chapter 13 business bankruptcy lawyer can carefully counsel you to help you determine the best next steps.

Our team of business bankruptcy attorneys can negotiate with creditors on your behalf and work to reorganize your debt into payment plans that you can afford. Chapter 13 payments can often be lower than monthly payments on credit cards while allowing you to pay off your debt in a reasonable time. Contact our office today to schedule your one-on-one case evaluation.