Bankruptcy Can Save Your Business!

11 Jan Bankruptcy Can Save Your Business!

Bankruptcy helps individuals with debt problems. It can also reorganize a business such as a corporation or partnership. And it can protect a sole proprietorship!

A Chapter 13 bankruptcy is designed to help reorganize one’s debts. It allows a debtor to “catch up” on secured or priority obligations (like house payments or taxes) and to get rid of a portion of unsecured non-priority debts (like credit cards or medical bills).

And it will also allow you to reorganize a sole proprietorship.

Bankruptcy Code Section 1304 lets you to file a chapter 13 if you meet the debt limitations for a chapter 13, have regular income and incur “trade credit.”

Trade credit? All that means is that you operate a business that borrows money or incurs debt to buy goods and pays off those loans on a regular basis. This includes buying materials to use in the business or buying manufactured goods to resell. Even paying phone book advertising will qualify!

There are tremendous advantages to filing a Chapter 13 bankruptcy if you are self-employed and running a sole proprietorship. You can renegotiate a lease or cancel one if you can’t afford it. You can continue to borrow money to run the business if necessary (although in some instances you will need court approval to do that). And, you can choses to not pay some unsecured debts altogether or pay others over time.

You can even force the IRS to spread tax payments you owe over several years.

And, at the same time, you’ll get all of the other benefits of a Chapter 13. These include stopping a foreclosure on your home or stripping an unsecured lien (including a 2nd mortgage or line of credit).

If you are facing financial problems in your business; seek the advice of a competent local bankruptcy attorney. You just might be surprised to learn that you can save the business!

 

 

image credit:“Cowboy” Ben Alman

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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