Many business owners who are facing bankruptcy frequently wonder what their options are regarding bankruptcy and business. There are actually multiple bankruptcy and business options that are potentially available to business owners who discover they are in financial trouble. In 2005, bankruptcy laws were passed that limits the ability of individuals and businesses from filing Chapter 7 bankruptcy. This was quite a blow to many business owners as well as private individuals because Chapter 7 bankruptcy had been the most popular option until that point. It should be understood; however, that while you cannot automatically choose which type of bankruptcy you want to file, Chapter 7 is still available under certain circumstances. Essentially, in order to be able to file for Chapter 7 you must now meet income and means tests which were established as a result of the changes in bankruptcy law in 2005. While these exact requirements vary from state to state as a result of income guidelines, the essence of the new law is that if you have sufficient disposable income, you will be restricted from filing Chapter 7 bankruptcy and must instead file for another form of bankruptcy that will allow you to repay creditors over a period of time.

In addition to Chapter 7 bankruptcy, there are also other business and bankruptcy options, including Chapter 11 and Chapter 13. Both of these options offer the ability of the business to restructure and establish repayment plans to pay back monies that are owed to creditors. Chapter 13 is typically reserved for wage earners; however, if an individual is self-employed or operates a business that is unincorporated they can still be eligible to file for Chapter 13 if their unsecured debts are less than $336,900.

Another bankruptcy and business option that may be available to some people is Chapter 12. This form of bankruptcy is used for family farmers and family fisherman who find themselves struggling with large amounts of debt. Like Chapter 11 and Chapter 13, it allows you to develop a plan for repaying the debt so that the business can continue to operate. The entire plan is usually carried out over a period of three to five years. One of the primary differences between this form of business bankruptcy and other business and bankruptcy options is that under Chapter 12 a number of barriers are removed that are present under other forms of bankruptcy. This form of business bankruptcy was specifically designed to meet the unique needs of family farmers and fishermen.

If you are considering filing for bankruptcy but you are not sure which business and bankruptcy option is right for your situation, it is best to consult an experienced bankruptcy attorney. He or she will be able to discuss the different eligibility requirements for each form of bankruptcy as well as explain the consequences of each option. Remember that bankruptcy does not have to be the end of everything that you know. When handled properly, it can give you and your business a fresh new start.

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