Going to file both Chapter 7 and 13.

[nytstyk]

My wife and I own a franchise business in CT that is failing. We set up an Scorp to open the business but were required to sign personal guarantees to the franchise, landlord and bank for the sba government loan we took out. We have 6.5 years left on our lease. We are not behind on any personal payments for our household(as my wife works elswhere and gets a paycheck) nor the business as of yet. The business has never been profitable and we have been open 3.5 years. It is clear we won't make it and have consulted with somebody locally. We have tried to sell the business but nobody wants to buy or at the very least offer us much less than what we owe on the sba loan. The recommendation is to file a chapter 7 to deal with all unsecured debt; franchise agreement, landlord, etc. Then, it is recommended to file a chapter 13 a short time later and do a "cram down" to get on a 5 year payment plan to pay off the sba loan.
Can anyone offer their advice on this please? Thanks.
subdued

[chpxiii]

You may not have a choice on what you can file. You'll need to discuss this with 3 or 4 bkcy attorneys.

[HHM]

It is difficult to qualify for a 7 and then turn around and file a chapter 13. After all, if you have disposable income to file a 13, a few months after filing chapter 7, how do you expect to qualify for a 7 in the first place?

[keepmine]

While Chapter 20's are still doable despite bk reform, I was under the impression that you had to have a 100% repayment plan to the secured creditors in the 13 filing????

[HHM]

The problem is, the 2005 law limits your ability to get a discharge in the subsequent 13 until so many years have passed from your chapter 7 discharge (I don't have the exact number handy).

Generally, the so called chapter 20, is used when you have substantial "priority" debts(i.e. taxes) that cannot be discharged in a 7. Basically, what you do is file chapter 7 to discharge your unsecured, non-priority claims, and possibly surrender any asset you no longer wish to keep. Then turn around, and file a chapter 13 to pay back the priority claims over 5 years. But like Keepmine pointed out, this plan, under the 2005 law, really only works if you are able to pay off the amount owed completely since you cannot receive a discharge of your 13.

[Rover]

The problem is, the 2005 law limits your ability to get a discharge in the subsequent 13 until so many years have passed from your chapter 7 discharge (I don't have the exact number handy).

The exact number is 4 years. You can't get a Ch. 13 discharge until 4 years after a Ch. 7 discharge. So, The Ch. 13 needs at least a 4 year repayment plan.

Does anyone know whether Chapter 20's are still be used to fight a foreclosure? For example, if one can fight a foreclosure in court long enough for a Ch. 7 to be discharged, one could then file Ch. 13 to stop the foreclosure.

Granted there is the issue of qualifying for a Ch. 7 and then showing sufficient income to support a Ch. 13, but forgetting that possible problem would there be anything that would block such a strategy?

[Rover]

While Chapter 20's are still doable despite bk reform, I was under the impression that you had to have a 100% repayment plan to the secured creditors in the 13 filing????

In a Ch. 13, aren't secured creditors always paid 100%? Isn't it just the unsecured creditors that can be paid less than 100%?

[keepmine]

In a Ch. 13, aren't secured creditors always paid 100%? Isn't it just the unsecured creditors that can be paid less than 100%?

Correct. The OP made a reference to a "cramdown". That's why I asked the question.
Chapter 20's are still doable. To a search under my name . I started a thread a couple of weeks ago and provided a link to a case in the4th circuit that approved the filings.

[Rover]

Does anyone know whether Chapter 20's are still be used to fight a foreclosure? For example, if one can fight a foreclosure in court long enough for a Ch. 7 to be discharged, one could then file Ch. 13 to stop the foreclosure.

I should add that this strategy would obviously only work in a state like Florida where the property being foreclosed would be protected by a homestead exemption under the Ch. 7.

[Rover]

Chapter 20's are still doable. To a search under my name . I started a thread a couple of weeks ago and provided a link to a case in the4th circuit that approved the filings.

Thank you very much. That was very helpful.