Quick facts: Washington
- Chapter 7
- Liquidation
- Chapter 11 / subchapter V
- Reorganization; small business option
- Chapter 13
- Individual repayment plan, usually 3 to 5 years
- Before filing
- Credit counseling within 180 days for individuals
- First step
- Talk to a bankruptcy attorney
Fees, rules and rates change, often on July 1 and January 1. Verify every item with the responsible agency before you rely on it.
Short answer: Bankruptcy is a legal decision for a bankruptcy attorney, not a website. In general terms, chapter 7 is liquidation, chapter 11 is reorganization (with a subchapter V option for small businesses), and chapter 13 lets an individual, including a self-employed person, keep property and repay over three to five years. A sole proprietorship has no separate identity from its owner. Try the alternatives first, and get your numbers together before the consultation.
Updated October 12, 2026. Requirements and fees change; confirm with the agency named on this page.
If you are here, things are serious. This page will not tell you whether to file; only an attorney who sees your situation can. It will help you understand the words and walk in prepared.
The chapters, in the courts' words
- Chapter 7: "Liquidation Under the Bankruptcy Code".
- Chapter 11: "Chapter 11 of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership." Subchapter V "was created in 2019 by the Small Business Reorganization Act (SBRA)."
- Chapter 13: "Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years." and "Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief" within the debt limits.
Sole proprietors
The courts note a sole proprietorship "does not have an identity separate and distinct from its owner(s)." Personal guarantees can reach an LLC owner too. Ask the attorney about both.
Before filing
Individuals generally must have "within 180 days before filing, received credit counseling from an approved credit counseling agency."
Alternatives to ask about first
- Payment plans with the IRS and Washington DOR. See behind on taxes and bills.
- Negotiated terms with suppliers and lenders.
- Refinancing or consolidation, with a CPA's review.
- Fixing the leak that caused it. See what to do first.
Walk in prepared
Bring a list of every debt, creditor, balance and payment; a 13-week cash flow; and your last two years of returns. Operator's business recovery path builds the debt and obligation inventory with you. It does not give bankruptcy advice and does not replace an attorney.
General education, not legal, tax or financial advice. Talk to a licensed professional about your situation.
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Common questions
Can a contractor file bankruptcy and keep working?
It depends on the chapter, the entity and your licensing and bonding. Ask a bankruptcy attorney, and ask about the effect on your contractor registration and bond.
What is subchapter V bankruptcy?
A chapter 11 option for small business debtors created in 2019 by the Small Business Reorganization Act, with a debt limit set by law.
Do I need credit counseling before bankruptcy?
Individuals generally must receive credit counseling from an approved agency within 180 days before filing, with limited exceptions.
Sources
Official pages checked on 2026-10-12.
- www.uscourts.gov/court-programs/bankruptcy/bankruptcy-basics
- www.uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics
- www.uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics