While the default option for many businesses is to file Chapter 7 bankruptcy, Chapter 13 business bankruptcy in Newport Beach CA offers some advantages. Businesses that are sole proprietorship may wish to consider filing Chapter 13 business bankruptcy in Newport Beach CA for the following reasons:
Retention of Assets
Unlike with a Chapter 7 filing, you can keep all of your assets. You don’t have to worry about exemptions and having to liquidate your property. This is particularly attractive to business owners who have a lot of equipment and who need this equipment to relaunch their business. Since this type of bankruptcy is based on using a repayment plan, you can keep the assets of your business, allowing you to keep the business in operation while you reorganize your debt.
Restructuring of Debt
Many businesses have used bankruptcy as a strategic way to restructure their debt. A Chapter 13 bankruptcy sometimes allows business owners to pay off priority creditors and devote more funds to secured loans.
However, there are some drawbacks to a Chapter 13 filing. The business will likely pay off more debt in this manner than through a Chapter 7 bankruptcy. Also, the case will take much longer than a Chapter 7 filing since payments must be made to a bankruptcy trustee for three to five years. Only sole proprietorships can file for this type of bankruptcy. A business bankruptcy lawyer can explain your options and recommend the best course of action.