Can businesses file Chapter 13?

There is a chance that your company could file for Chapter 13 personal bankruptcy. If you qualify for and adhere to the strict repayment plan associated with this type of debt reorganization, it could represent a way for you to continue doing business, keep your home and meet various other lifestyle and financial goals. 

According to, Chapter 13 and Chapter 11 — the latter of which you may already associate with business bankruptcy — are closely related. Your company could potentially restructure under Chapter 13 if you met certain conditions. One of the most important requirements is being under maximum debt levels, and your company’s legal structure would also potentially be a factor. 

The time limit 

Much of your bankruptcy would happen according to a schedule. At the time of filing, you could stop foreclosure and other debt-collection actions. After that, you would need to propose a repayment plan. If the court approved your plan, you would have three to five years to pay back your debts, at which point the court would discharge your case. 

The rules 

One of the most important things about Chapter 13 is making a plan you know you can follow. There are relatively strict rules, especially when it comes to making your payments on time. One error, depending on the type of debt in question, could set you back years in your company’s financial recovery plan. 

The outlook 

With Chapter 13, you generally get to keep most of your assets. However, you may choose to sell certain property in order to put yourself in a better financial position to pay your debts and meet the requirements of your plan. In general, this means that the outlook is mostly business as usual for many bankruptcy applicants of this type, with a few important modifications. 

In summary, Chapter 13 bankruptcy for small businesses is more than a distant possibility. In many cases, it is a logical choice.