Posted On: July 16, 2010

Can I Save My Business In Bankruptcy?

A Sacramento bankruptcy lawyer answers: Can I Save My Business In Bankruptcy?

Bankruptcy allows for the liquidation and reorganization businesses in order for the owners to start fresh. There are four types of bankruptcy that mainly depends on the form that the business entity decides to take. Chapter 7 is a liquidation bankruptcy, Chapter 13 is a personal bankruptcy, Chapter 12 is bankruptcy for farmers, and Chapter 11 is for businesses and individuals who do not qualify for Chapter 13.

Chapter 7 Bankruptcy

Although Chapter 7 is a liquidation bankruptcy owners of sole proprietorships or partnership small in enough in value or no value and with a small number of employees can file and keep their business. Traditionally solely owned businesses must be closed upon the filing of a bankruptcy. Trustees however allow business to operate because the value is low and monitoring the business would be burdensome to the bankruptcy estate. Trustees tend to request the owner to insure the trustee for liability during filing and ask that the filer file a request with the court to compel the trustee to abandon the business.

Chapter 13 Bankruptcy

A Chapter 13 is a reorganization where the sum of the whole is greater than its parts. That is creditor stand to recover more of its claims if the business is kept as a going concern rather than auctioning off all of the businesses parts.

A business cannot file a Chapter 13 bankruptcy but its owner can and the post filing profit is property of the bankruptcy estate and used to repay debts pursuant to a Chapter 13 plan. The trustee will examine the business to determine the income derived and the ability for the owner to fund the Chapter 13 plan. Like the Chapter 7 trustees, Chapter 13 trustees require the owner’s liability insurance to cover him or her.

Because most business generate more revenue than the typical wage earner the median income is of no effect. Couple this with case law that requires ordinary and necessary business expenses to be deducted after calculation of a current monthly income and you have an applicable commitment period of five years every time.

Chapter 12

Chapter 12 is reorganization for farmers and is much like Chapter 13. Chapter 13 trustees will commonly administer Chapter 12s.

Chapter 11

A Chapter 11 is a reorganization where the sum of the whole is greater than its parts. That is creditor stand to recover more of its claims if the business is kept as a going concern rather than auctioning off all of the businesses parts.

Businesses can file for Chapter 11 and reorganize themselves ridding itself of unneeded contracts and other commitments that pose to hinder reorganization. A plan and disclosure statements are proposed and put to a vote. Once the plan is confirmed the business is discharged on the condition it meet the requirements of the plan.

If you have questions regarding Bankruptcy in Sacramento please contact us at (916) 492-6020 in Sacramento or (916) 724-1690 in Roseville for a free consultation or visit and we can connect you with one of our experienced Sacramento Bankruptcy Attorneys. After you have spoken with one of our Sacramento bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Sacramento Bankruptcy Lawyers can assist you with all aspects of your bankruptcy or legal debt settlement case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, Sacramento and Roseville!

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At Sagaria Law, PC we want to guide you on the path to financial freedom and realize this is not an easy task for most. We respect your devotion to better your circumstances even with financial hardship and thus are willing to guarantee that if you retain us, we will do everything we can, legally and ethically, to help you become debt-free.

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The Sagaria law guarantee covers everything that a bankruptcy law firm produces in order to successfully complete a bankruptcy filing. We guarantee that it will be done in a manner that is accepted for filing with the bankruptcy clerk's office.

There may be reasons beyond our control that may cause a case to be dismissed. Therefore, the 100% Money-Back Guarantee does not guarantee;

  1. That you will receive a discharge.
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