Bankruptcy For Small-Business Owners FAQ
What’s the difference between Chapter 7 and Chapter 13 bankruptcy for small businesses in Texas?
Understanding the difference between Chapter 7 and Chapter 13 bankruptcy is crucial for Texas small business owners facing financial difficulties. Texas Chapter 7 bankruptcy involves liquidating assets to pay off debts, often resulting in business closure. In contrast, Texas Chapter 13 bankruptcy allows for debt reorganization and a repayment plan, potentially enabling the business to continue operating.
Can Texas small business owners file for Chapter 7 bankruptcy?
Texas small business owners can file for Chapter 7 bankruptcy, but it’s important to note that this option is typically used for sole proprietorships. Corporations and partnerships in Texas usually can’t file for Chapter 7 bankruptcy, limiting its applicability for certain business structures.
How does Chapter 13 bankruptcy affect Texas small business operations?
When pursuing Chapter 13 bankruptcy in Texas, small business owners may continue operating their business while adhering to a court-approved repayment plan. This Texas small business debt reorganization typically spans 3-5 years, allowing entrepreneurs to catch up on missed payments and potentially reduce some debts.
What assets can Texas small business owners protect in bankruptcy?
Texas offers generous exemption laws for small business owners filing bankruptcy. When filing for Chapter 7 or Chapter 13 bankruptcy in Texas, small business owners may protect assets such as their homestead (primary residence), significant personal property, tools of the trade (business equipment), one vehicle per licensed household driver, and retirement accounts and pensions. These Texas bankruptcy exemptions primarily benefit sole proprietors, while separate legal entities like LLCs or corporations may have different protections. Consulting a qualified Texas bankruptcy attorney is crucial to understanding how these exemptions apply to your specific situation.
How long does the bankruptcy process take for Texas small businesses?
The duration of small business bankruptcy in Texas varies by chapter. A Texas Chapter 7 small business bankruptcy typically completes in 4-6 months, offering a quicker resolution. In contrast, a Texas Chapter 13 small business bankruptcy involves a repayment plan lasting 3-5 years before case closure, providing a longer-term debt management solution for Texas entrepreneurs.
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If you have questions about Chapter 11 bankruptcy in Texas, call 903-920-0008 or use our online form today to schedule a consultation with an experienced legal team.
William H. Lively, Jr. WHL, PLLC, is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.