Chapter 7: Liquidation
Best for closed businesses. Personal EIDL liability discharged. ~4 months. Must pass means test.
Chapter 13: Individual Plan
Best for sole proprietors with regular income wanting to keep operating. 3-5 year plan. Debt limits: unsecured under $526,700 and secured under $1,580,125.
Subchapter V Chapter 11
Best for LLCs, corps, and higher debt. Debt limit $3,424,000 (the temporary $7.5M limit expired June 21, 2024). Business continues. Streamlined process.
Assignment for Benefit of Creditors
State-law alternative. Assigns assets to an assignee for liquidation. Does NOT discharge personal guarantees - you need bankruptcy for that.
Frequently Asked Questions
Which chapter is best?
Closed business: Ch.7. Sole proprietor keeping business: Ch.13. LLC/corp or higher debt: Subchapter V.
Can I file for the LLC without filing personally?
Yes, but the LLC's bankruptcy does not discharge your personal guarantee. You may need both.
What if I have multiple SBA loans?
All SBA loans are dischargeable and can be addressed in a single bankruptcy case.
Check your bankruptcy discharge eligibility with our free screening tool.
Free Discharge Screener