Chapter 13 Bankruptcy
A personal bankruptcy option allowing an individual to repay debts over a three-to-five-year court-approved plan, relevant to a sole proprietor or a business owner personally.
Chapter 13 is a personal, not business, bankruptcy filing, most relevant to a sole proprietor whose business and personal finances aren’t legally separated, or to a business owner personally, and it involves a structured repayment plan rather than liquidation.
Because it involves an individual’s personal finances directly, a Chapter 13 filing by a business owner can factor into underwriting the same way other personal credit history does, especially when a personal guarantee is part of the financing.
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