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Can I Start A Business While In Chapter 13

By Sanjida Mollick

Starting a business while in Chapter 13 can be a daunting task, but it is possible. Whether you plan to operate as a sole proprietorship or create a corporation, you need to understand the rules and restrictions associated with filing for bankruptcy protection. This guide will explain the key information you need to know when considering whether starting a business while in Chapter 13 is the right choice for you.

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What type of businesses can I start while in Chapter 13?

The type of business that you start is up to you, as long as it doesn’t violate any laws or regulations. Common types of businesses you may consider include sole proprietorships, limited partnerships, C corporations and S corporations. However, it is important to note that your Chapter 13 Bankruptcy Trustee will need to approve any new business projects before they can move forward - so make sure you get their approval before making any big commitments.

Can I use personal credit cards to fund my business while in Chapter 13?

Generally speaking it is not recommended that you use personal credit cards to fund your business while in Chapter 13 due to the risk of accumulating additional debt and potentially jeopardizing your repayment plan. Your best bet would be to explore alternative funding options such as loans from friends and family members or more traditional sources such as banks or investors (if available).

What risks should I consider when starting a business while in Chapter 13?

When starting a business while in Chapter 13 there are some risks that need to be considered before moving forward with your plans. In addition to needing permission from your trustee before setting up shop, any profits made through your company will go towards paying off creditors under the terms of your repayment agreement – meaning your income could be reduced significantly until after your repayment period ends. Additionally, if financial difficulties arise during this time, it could also lead to an early termination of the repayment agreement which would leave you back at square one with little recourse for recourse against creditors or credit report damage repair options available.

Conclusion:
Starting a business while in Chapter 13 Bankruptcy can present challenges, but also offers unique opportunities depending on what kind of venture or project you are looking into pursuing. By understanding all potential risks and obtaining consent from trustees prior to taking action, individuals may have greater chances at success even though their financial circumstances are limited during this time period. Ultimately only each individual can judge whether this option is viable for them but hopefully this guide provides additional insight into this issue so that informed decisions can be made along the way!

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Sanjida Mollick

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