Chapter 13 Bankruptcy

Frequently overlooked, a Chapter 13 bankruptcy can be an effective way to reorganize for an individual in business. This may be surprising because Chapter 13 is for individuals only, not corporations, but it may be a good fit for a businessperson. A Chapter 13 reorganization is typically simpler and less expensive than a Chapter 11 case. However, the applicable Chapter 13 debt ceilings may force an individual into Chapter 11; an individual Chapter 11 bankruptcy requires special skill and experience that we provide.

By contrast to Chapter 7, in which a trustee liquidates any nonexempt assets, in Chapter 13, the debtor remains in possession and control of all assets and continues in business. The debtor proposes a plan of reorganization which, if approved, acts as a new binding contract with creditors usually to pay a reduced portion of their claims over time.

For example, we represented an individual operating an insurance brokerage firm as a sole proprietorship. In a successful Chapter 13 case, we were able to reorganize both his business and personal affairs by stripping off and eliminating two junior mortgages on his home and also by dramatically reducing his business debt. In the meantime, the broker was able to keep his assets and continue in business without interruption.

To discuss whether a Chapter 13 case is appropriate, contact an attorney at Macdonald Fernandez LLP. Contact us online for a confidential consultation with a lawyer.