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If you’re a small business owner struggling to stay afloat, you’re not alone. Bankruptcies for small businesses are up, but it can be less stressful and less costly than it sounds. Here’s how you can help your business.
Financial Woes
Small businesses are in distress. A report from Epiq AACER, the leading provider of U.S. bankruptcy filing data, found that the number of small businesses filing for Subchapter V of Chapter 11 bankruptcy increased 17% to 200 from the 171 registered over the same period from last year.
Bankruptcies across the board are up. Epiq found that the total number of U.S. bankruptcy filings in August 2025 increased 6% from last year. Individual bankruptcy filings went up 7%.
Business management consultants like Harvey Partners recommend filing for Subchapter V bankruptcy if businesses meet requirements. For most businesses, the terms of Chapter 11 bankruptcy can be “overly complex and cost-prohibitive,” according to Harvey Partners, with Subchapter V a more viable option for restructuring for small businesses.
Here are the requirements a small business must meet to file for Subchapter V:
- Owners must have non-contingent, liquidated debt less than an amount that is adjusted at three-year intervals; check the law for the debt limit applicable to your situation.
- Owners need a reorganization plan that includes credible financial projections that show their disposable income over the next three to five years will exceed what they would bring in via liquidation.
A trustee is typically appointed to help put together a consensual plan that works for both the debtor and primary creditors, according to Harvey Partners.
Stand On Business
Navigating bankruptcy can be a stressful and convoluted process. Financial advisors can help, especially those who specialize in debt relief and settlements.
Money Management International, for example, is a nonprofit that offers debt relief assistance with affordable debt management plans and free basic credit counseling.
MMI can work with clients to get together a reorganization plan that’s required to file for Subchapter V. Even if MMI can’t directly assist you with a plan, its counselors can guide you to resources and recommend next steps.
Bottom Line
Experts say filing for Subchapter V as a small business owner may be more viable than filing for Chapter 11 bankruptcy. Debt relief experts can help business owners assemble a plan to get their application in order.
