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 oneâ€™s debts. It allows a debtor to â€œcatch upâ€ 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 â€œtrade credit.â€
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 canâ€™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, youâ€™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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