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Paul N. Mirabelli, Esq

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Paul N. Mirabelli, Esq

It depends on how the business is set up. If it’s a corporation or an LLC, then they have an independent existence, and it shouldn’t affect your ability to file one company bankrupt. A trustee is going to want to ensure that you’re not taking money out of the company that you’re filing bankruptcy for and funneling the money to your other company. If you’re a sole proprietor, then you would have to file personal bankruptcy in order to include a business that’s a sole proprietorship.

Are There Advantages To Filing A Chapter 13 Bankruptcy For My Business Or Personal Bankruptcy If I Plan To Continue My Business?

If you have an LLC or a corporation, you’re not eligible to file a chapter 13, and would have to file a Chapter 11. Chapter 11 bankruptcies are usually very expensive and complex, and, unless you have a business plan that is going to generate more income that you have been generating in the past they are usually not successful.

There are several instances where you would file a personal chapter 13 as opposed to a chapter 7. The first instance is if the means test determines you have disposable income, which means there is available income to pay your creditors. The second instance would be if you’re trying to modify your mortgage. The third instance is if you are behind on your mortgage. You can file a chapter 13 to pay the arrears over the length of the plan, usually 3-5 years, but you must continue to make your normal monthly payments. In that situation, a court would have to determine whether such a chapter 13 plan is feasible. A plan is feasible if you are able to show that your income is sufficient to pay the arrears payment on your mortgage, the normal monthly mortgage payment and all of your other reasonable and necessary living expenses, such as food, utilities, cell phone, car insurance, etc.

Another advantage of a chapter 13 is that you can pay your attorney’s fees over the life of the plan. The attorney fees for chapter 13 are much higher than a chapter 7, but you can spread them out and have them paid through the life of the plan.

Fourth situation to file a chapter 13 is to protect assets that have non-exempt equity. For example, if you own a house that is worth $200,000 and the mortgage balance is $100,000 . After deducting the 10% sale cost, the mortgage, and the exemption, your house would have $30,000 of non- exempt equity that would be available to your creditors. If you file for a chapter 7, the trustee is going to want to sell that property and take the $30,000 to distribute amongst your creditors. With a chapter 13 bankruptcy, you can take that $30,000 of non-exempt equity and pay it out over the life of the plan, giving you the ability to protect the house from creditors, which under these circumstances you cannot do through a chapter 7.

By Filing the Chapter 13 Bankruptcy, Do I Have The Right To Continue Operating My Business?

Yes, as long as it’s generating income that’s going to support the chapter 13 plan. You would also have to list any businesses as assets in your bankruptcy, but you could continue to operate them as usual. You also have the right to sell any assets that might be part of your bankruptcy if you’re filing a chapter 13. If you’re filing a chapter 7, the trustee is going to make a determination if, by selling your business, there are moneys to be generated to pay off your creditor. But in a chapter 13, you can sell with the approval of the bankruptcy court. Typically, the proceeds of the sale of an asset that doesn’t qualify for an exemption is going to be used to pay towards your unsecured debt or your Chapter 13 Plan.

For more information on Bankruptcy In New Jersey, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (732) 733-2830 today.

Attorney Paul Mirabelli

(732) 733-2830