U.S. Code
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Title 11
» Chapter CHAPTER 13— ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR INCOME › Subchapter SUBCHAPTER I— OFFICERS, ADMINISTRATION, AND THE ESTATE
11 U.S.C. § 1304
Debtor engaged in business
(a) A debtor that is self-employed and incurs trade credit in the production of income from such employment is engaged in business.(b) Unless the court orders otherwise, a debtor engaged in business may operate the business of the debtor and, subject to any limitations on a trustee under sections 363(c) and 364 of this title and to such limitations or conditions as the court prescribes, shall have, exclusive of the trustee, the rights and powers of the trustee under such sections.(c) A debtor engaged in business shall perform the duties of the trustee specified in section 704(a)(8) of this title.(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2646; Pub. L. 98–353, title III, §§ 311(b)(2), 526, July 10, 1984, 98 Stat. 355, 389; Pub. L. 111–327, § 2(a)(40), Dec. 22, 2010, 124 Stat. 3562.)Historical and Revision Noteslegislative statementsSection 1304(b) of the House amendment adopts the approach taken in the comparable section of the Senate amendment as preferable to the position taken in the House bill.
senate report no. 95–989Increased access to the simpler, speedier, and less expensive debtor relief provisions of chapter 13 is accomplished by permitting debtors engaged in business to proceed under chapter 13, provided their income is sufficiently stable and regular to permit compliance with a chapter 13 plan [section 101(24)] and that the debtor (or the debtor and spouse) do not owe liquidated, noncontingent unsecured debts of $50,000, or liquidated, noncontingent secured debts of $200,000 (§ 109(d)).
Section 1304(a) states that a self-employed individual who incurs trade credit in the production of income is a debtor engaged in business.
Subsection (b) empowers a chapter 13 debtor engaged in business to operate his business, subject to the rights, powers and limitations that pertain to a trustee under sections 363(c) and 364 of title 11, and subject to such further limitations and conditions as the court may prescribe.
Subsection (c) requires a chapter 13 debtor engaged in business to file with the court certain financial statements relating to the operation of the business.
Editorial NotesAmendments2010—Subsec. (c). Pub. L. 111–327 substituted “704(a)(8)” for “704(8)”.
1984—Subsec. (b). Pub. L. 98–353, § 526, struck out the comma after “of the debtor”.
Subsec. (c). Pub. L. 98–353, § 311(b)(2), substituted “section 704(8)” for “section 704(7)”.
Statutory Notes and Related SubsidiariesEffective Date of 1984 AmendmentAmendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title.
Notes of Decisions
Houston v. Eiler (In Re Cohen), 305 B.R. 886 (9th Cir. BAP 2004).
· cites it 3× “11 U.S.C. § 1304 (b). 13 Fourth, the chapter 13 “property of the estate” that, as noted, remains in the debt- or’s possession, includes all of the property designated by 11 U.”
Williams v. Clark (In Re Clark), 91 B.R. 324 (Bankr. E.D. Pa. 1988).
· cites it 3× “We would direct the Trustee to make the needed repairs under the authority of 11 U.S.C. § 1304 (b), which provides as follows: (b) Unless the court orders otherwise, a debtor engaged in business may operate the business of the debtor, and, subject to any limitations on a trustee…”
Fatsis v. Braunstein (In Re Fatsis), 405 B.R. 1 (1st Cir. BAP 2009).
· cites it 2× “See 11 U.S.C. § 1304 (b). The bankruptcy court concluded that § 1303 was not applicable in this case because the right to use property of the estate in the ordinary course of business is found in § 363(c), a subsection not incorporated into § 1303.”
In re Johnson, 532 B.R. 53 (Bankr. W.D. Mich. 2015).
· cites it 2× “See 11 U.S.C. § 1304 (b). The Debtor’s financial life is inextricably bound up with his federal criminal activity through the chapter 13 plan, even if he segregates proceeds of that activity.”
In re Way to Grow, Inc., 597 B.R. 111 (Bankr.D. Colo. 2018).
“79 Third, the debtor's intent to continue his marijuana business post-petition constituted being "engaged in business" for purposes of 11 U.S.C. § 1304 , requiring court approval for expenditure of funds pursuant to 11 U.”
In Re McCormick, 381 B.R. 594 (Bankr. S.D.N.Y. 2008).
· cites it 2× “§ 362 (a) enjoyed by an individual chapter 13 Debtor be extended to his wholly owned limited liability company? The Court will not extend the protection of automatic stay created by Debtor’s filing under chapter 13 of the Bankruptcy Code to his LLC under 11 U.S.C. § 1304 . As…”
Dawson v. Thomas (In Re Dawson), 411 B.R. 1 (D.D.C. 2008).
“11 U.S.C. § 1304 (b). Section 363(b) addresses a trustee’s power to use property of the estate other than in the ordinary course of business, and § 363(c) addresses a trustee’s power to use property in the ordinary course of business.”
Matter of Driscoll, 57 B.R. 322 (Bankr. W.D. Wis. 1986).
“In addition, 11 U.S.C. § 1304 adds various other powers for a Chapter 13 debtor engaged in business.”
In Re Carter, 2 B.R. 321 (Bankr.D. Colo. 1980).
“In addition, 11 U.S.C. § 1304 adds various other powers for a Chapter 13 debtor engaged in business.”
Miller v. Bhd. Credit Union (In Re Miller), 251 B.R. 770 (Bankr. D. Mass. 2000).
· cites it 2× “” 11 U.S.C. § 1304 (a). The bankruptcy court equated a Chapter 13 debtor, who was operating a business under section 1304, with a debtor in possession.”
Bogdanov v. Laflamme (In Re LaFlamme), 397 B.R. 194 (Bankr. D.N.H. 2008).
“…business is one who is "self-employed and incurs trade credit in the production of income from such employment....” 11 U.S.C. § 1304 (a).”
Robb v. Lybrook (In Re Lybrook), 107 B.R. 611 (Bankr. N.D. Ind. 1989).
“See 11 U.S.C. § 1304 (b). As to the debtors’ 1986 income tax refund, payable in 1987, this asset was originally delivered to the Chapter 13 trustee, prior to conversion.”
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