In the public realm, Indiana consumers think of a Chapter 13 bankruptcy as an alternative to the more common Chapter 7.
Basically, it is for consumer debtors who, for whatever reason, want to offer a court-sanctioned repayment plan that will pay all or an approved portion of their debts for 3 to 5 years.
A Chapter 13 may also be the best option for certain businessowners.
Specifically, people who are sole proprietors, that is, they own a business in their own names and do not incorporate, are eligible to file for Chapter 13 bankruptcy. Other criteria also apply.
The owners of corporations and other business types that are suffering financial distress may benefit from a Chapter 13 depending on their circumstances.
However, incorporated businesses and LLCs are themselves not eligible for Chapter 13; these enterprises would have to explore other bankruptcy or non-bankruptcy options.
A Chapter 13 bankruptcy can keep a struggling business operating
An Indianapolis resident who wants to use Chapter 13 to save her business will have to demonstrate that she can make regular monthly payments toward her debts.
In many cases, this will mean having to show the court that the business can turn a profit going forward.
Otherwise, the process can afford a business owner a very favorable repayment plan in which he may be able to pay a small portion of his unsecured business debts but discharge the rest. Sometimes, the owner may only have to commit to a 36-month plan.
Furthermore, in a Chapter 13, the business will usually be allowed to keep property and therefore maintain the equipment and facilities it needs to operate.
Business owners who qualify for Chapter 13 and may want to speak with an experienced bankruptcy attorney about pursuing this option.