Small Business has Alternatives What's Best Chapter 13 Chapter 11

Chapter 13 can be used to save a small business provided  the business is a proprietorship (not incorporated and not a partnership) and provided the debt limitations of a Chapter 13 are met.   A Business Chapter 13 works best if most of the debts are unsecured and those debts that are secured can be repaid within a 5 year period.  Restructuring loans on equipment and vehicles can also be accomplished provided the ownership time periods are met.  
A Chapter 13 has some limitations which may not make a business chapter 13 your best choice:   

• A Chapter 13 plan must be filed immediately with the first payment due 30 days from the filing date.  In many cases a business, large or small, needs some time to reorganize internally, such as cutting operating expenses, before addressing creditors and begin paying their creditors back.   
•  A Chapter 13 plan cannot exceed 60 months.  In many cases this limitation prevents a small business from addressing certain issues that need to be addressed  to make the Business Chapter 13 successful.   
• If a business owner also owns the building and real estate from which the business operates and the loan against the building needs to be adjusted because the interest rate is too high; the value of the building is worth less than the debt or the amortization period is too long, a Business Chapter 13 will not work because any such debt that is restructured in this manner must be paid in full in 5 years or 60 months. 
•  The equipment or vehicles have not been owned long enough to allow the debt to be modified sufficiently under Chapter 13. 

 There is an alternative to a Business Chapter 13 - a Small Business Chapter 11   There are now numerous  features that cut the cost of a Small Business Chapter 11:

• There is now a form Chapter 11 Plan and a form Chapter 11 Disclosure Statement.  This helps reduce the cost of a Small Business Chapter 11.  
•  Monthly operating reports for a small business have been made simpler than the standard monthly operating report. 
• One of the problems for an individual filing a small business chapter 11 is that a discharge is not granted until after the last payment is made.  This fact added a significant additional burden because the quarterly reports and quarterly fees had to be paid while the case was open.
•  Under limited circumstances to allow a discharge to be entered immediately as part of the Order Confirming the Plan.   The fees and  expenses for a Small Business Chapter 11 is now a reasonable alternative to a Business Chapter 13.

It's important as a business owner to weigh the benefits and costs of a Business Chapter 13 versus the benefits and costs of a Small Business Chapter 11.   As with any important decision be sure to get a second opinion.  Many bankruptcy lawyers are  consumer - only chapter 7’s and chapter 13’s or a business bankruptcy chapter 11 practice.  A Small Business Chapter 11 requires the finesse of both.