A previous post on this blog mentioned that certain business owners may be able to use Chapter 13 bankruptcy to manage their business debts and therefore save their small business enterprise from having to close.
As this blog has mentioned previously, a Chapter 13 bankruptcy, which involves a southeastern Tennessee resident repaying all or part of their debts over time in a monthly plan supervised by the bankruptcy court, is designed for individuals. Thus, a corporation or other business organization, like an LLC, is generally going to have to file a Chapter 7 or Chapter 11 should it run into financial trouble.
However, many Tennessee residents in Bradley County still have their business affairs wrapped up with their personal finances and operate what the law calls a sole proprietorship, which basically means a person and his or her business are legally considered one and the same, even when it comes to debts and other business obligations.
Although this setup might cause legal difficulties in other areas, one advantage a sole proprietorship enjoys is that the proprietor, or business owner, has access to a Chapter 13 bankruptcy even if their financial trouble is due to business debts. The person of course must be otherwise qualified to file a Chapter 13 that, perhaps most importantly, means he or she has a steady stream of income with which he or she can make monthly payments.
Chapter 13 may even be a better option for business owners than it would be for people who are dealing with personal debt, as certain rules about how much one must pay each month toward debts, and for how long, could be slightly different. Of course, whether a Chapter 13 is best for one’s individual situation is a question that is usually a good one to discuss with an attorney who specializes in bankruptcy.