When a business owner in Maryland is struggling, their first thought might be to file for Chapter 7 bankruptcy. Filing for Chapter 7 allows them to discharge some of their debts, pay off others and walk away from the business and start anew. However, if they’re not ready to give up on their business quite yet, they might consider filing for Chapter 13 bankruptcy instead.
What are the differences between Chapter 7 and Chapter 13 bankruptcy?
When an individual files for Chapter 7 bankruptcy, their business is liquidated, and the debts are paid off as much as possible. This is the best option for anyone who’s ready to let go of their business. However, filing for Chapter 13 can allow an individual to keep their business and give them some extra time to pay off their debts.
Once an individual files for Chapter 13 bankruptcy, they’re allowed to keep their business assets like a building and company car. Instead of liquidating their entire business, they’ll restructure their debts to make them easier to pay off.
Who should apply for Chapter 13 bankruptcy?
Chapter 13 bankruptcy is best for people who are confident that they can keep their business afloat. If they don’t have a solid business plan to make their business profitable in the next year, they might end up filing for Chapter 7 after all.
Where can an individual go for help with Chapter 13 bankruptcy?
Hiring an attorney might make it easier for an individual to file for Chapter 13 bankruptcy. An attorney may be able to help their client gather the necessary financial documents to prove to the court that they’re eligible for this type of bankruptcy.