Small business owners have many concerns when the nation is faced with economic uncertainties. Unsure if their business could survive a recession or a setback, they consider what is best for not only the business but for him or herself as well. When financial problems hit, and a home business suffers, this tends to seep into the personal finances of the home business owner. Thus, when considering debt relief options, it is important to consider those that could potentially help in both a personal and business manner. Filing for bankruptcy could be the solution.
Filing a Chapter 13 bankruptcy
A Chapter 13 bankruptcy is used when an individual seeks to reorganize their debt. Unlike a Chapter 7 filing, this will not automatically discharge debt. Rather, a Chapter 13 requires the filer to come up with a repayment plan lasting three to five years. Once the plan is completed, any remaining unsecured debt will be discharged. This bankruptcy option not only allows one to get on top of their finances but also helps them eliminate some of the debt that is bringing them down.
How a Chapter 13 filing could help your home business
In cases where a filer and their home business are the same financial entity, there are many ways a Chapter 13 filing could be of assistance. A chapter 13 filing would allow the filer to maintain their business while a Chapter 7 would no longer allow them to continue operations of the business under its current name. This means, they would have to create a new business once the debt is discharged.
A repayment plan could help a filer address debts such as mortgage or rent payments, auto loan or lease payments, payments on financed equipment or electronics, support obligations, such as child support or alimony, student loan arrears, state or federal fines or fees and state sales tax arrears. Once the repayment plan is completed, the certain debts could be discharged. This includes credit card debt, medical debt, certain past-due income tax, liens that are stripped-off and auto loans that are crammed down.
Filing for bankruptcy is not an easy decision to make; however, it is a decision that could help an individual with personal and business debt. Thus, it is important to fully understand ones options and how each filing could provide them financial benefits. This could help ensure one makes the best decision for their financial future.