Small business is the backbone of our economy. In 2014, according to U.S. Census Bureau data, firms with less than 20 employees made up 89% of all businesses and employed nearly half of the U.S. workforce. Small businesses operate in a myriad of industries and are as diverse as the customers they serve. Despite their diversity, small businesses share many common elements. From customer service to accounts receivable t0 personnel, a small business owner wears many hats. Most business owners start with industry skill and work to develop business acumen. Even a veteran small business owner will need to make quick decisions with limited and imperfect information – essentially an educated guess. Will a particular ad produce? Will a potential employee become a company leader? With so many risks, things are bound to go wrong. Usually the business can survive and even thrive when most things go well but what happens when several things go sour at once? Business reorganization can be the solution.
Chapter 13 is a personal reorganization available to a small business operated as sole proprietorship. Chapter 13 stops threatening phone calls, dunning letters and even lawsuits. Chapter 13 can stop tax collectors, break a lease, stop evictions and so much more. One common misconception is that chapter 13 requires full payment of all debts. Nothing could be further from the truth. Another misconception is that chapter 13 relies on negotiation with creditors and will fail if even one creditor does not agree to the plan. In most cases, the bankruptcy judge approves a chapter 13 with no input from creditors whatsoever. The bankruptcy laws are designed to give a business some breathing room and a chance to establish payment plans for certain critical debts and obtain forgiveness of other debts. The law strives to offer much needed help to cash-strapped small businesses. Often people ask if they can just file bankruptcy for their business and if the business is a sole proprietorship then business affairs and the owner’s personal affairs are one-in-the-same which means any bankruptcy will necessarily be a personal bankruptcy and will reflect as a bankruptcy on the owner’s credit.
At the Law Office of Michael Primus we have helped thousands of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Contra Costa, Alameda or Solano counties and have debt problems, contact us for a free in-office consultation. We have offices in Walnut Creek, Antioch, and Hercules.