A Less Complex and Costly Option May be Available
Chapter 11 bankruptcy is the most common form of bankruptcy for businesses due to its ability to provide a way for businesses to restructure and reorganize their debts while remaining in operation. However, a traditional Chapter 11 filing is too complicated and expensive for many small businesses to pursue.
For some of these small businesses, Subchapter V of Chapter 11 is a more accessible form of Chapter 11 bankruptcy. A relatively new kid on the block, Subchapter V was launched in 2020 and is available to profitable businesses that need help finding an organized and effective way to pay down their outstanding debts.
The Benefits of a Subchapter V Filing
A Subchapter V filing offers a small business benefits such as:
- The ability to continue operations while going through bankruptcy
- No creditor approval is required prior to a Subchapter V filing
- Your plan will be yours; creditors cannot submit a plan on your behalf
- Unlike Chapter 11, no detailed disclosure statement is required
- Your debt repayment will occur in manageable installments over three to five years
Who Qualifies for Subchapter V?
There is a means test that must be passed to qualify for Subchapter V. Prospective filers must be actively engaged in business pursuits and have debt that does not exceed $2.75 million and at least half of the debts must be the result of business activities. This debt limit is why Subchapter V is almost exclusively a small business option.
We Can Help You Take the First Step
At Steinhilber Swanson LLP, our Wisconsin bankruptcy lawyers have been helping small businesses in bankruptcy for decades. We can help you determine your options and provide you with the information you need to make a confident decision about how to proceed. We invite you to contact our firm to schedule a consultation by calling 866-381-4391. We have offices in Oshkosh, Madison and Milwaukee.
We are a debt relief agency. We help people file for relief under the Bankruptcy Code.