United States Code

11 U.S.C. § 1304 — Debtor engaged in business

Section 1304 addresses Chapter 13 filers who are self-employed. Subsection (a) defines a debtor as "engaged in business" when the debtor is self-employed and incurs trade credit in producing income from that employment. Subsection (b) provides that such a debtor may operate the business unless the court orders otherwise, holding the trustee's rights and powers under sections 363(c) and 364. Subsection (c) assigns the debtor the trustee duty specified in section 704(a)(8).

If your income comes from self-employment rather than a paycheck, a Chapter 13 case raises a question a wage earner never faces: what happens to the business while the case is pending? Section 1304 answers part of it. It defines which filers count as "engaged in business," then states what such a debtor may do and what such a debtor must do.

What makes a Chapter 13 debtor "engaged in business"?

Subsection (a) sets a two-part definition. A debtor is engaged in business when the debtor is self-employed and incurs trade credit in the production of income from that self-employment. Both parts appear in the text. Self-employment by itself is not the whole of what subsection (a) describes; the definition also turns on incurring trade credit in producing income from that work. The section does not define trade credit, does not list occupations, and does not set a size or revenue threshold for the business. It also draws no line between full-time and part-time self-employment. Because subsections (b) and (c) each begin with the words "a debtor engaged in business," the definition in subsection (a) is what determines whether the rest of the section speaks to a given filer's situation at all. Whether a particular working arrangement fits that definition is a question courts consider on the facts of the case.

Can you keep operating your business after filing Chapter 13?

Subsection (b) provides that, unless the court orders otherwise, a debtor engaged in business may operate the business of the debtor. The text states a default: operation is the starting position, and it is a court order that changes it. Subsection (b) also gives the debtor, exclusive of the trustee, the rights and powers of the trustee under sections 363(c) and 364. "Exclusive of the trustee" is the operative phrase — the text places those particular powers with the debtor rather than with the trustee. The grant is not unlimited. It is expressly subject to any limitations on a trustee under those two sections, and to such limitations or conditions as the court prescribes. Read together, subsection (b) describes continued operation as the default, with the court retaining the ability to condition it or to order otherwise.

What limits apply to operating the business under subsection (b)?

The text names two specific constraints and one open-ended one. First, the debtor's rights and powers are subject to any limitations on a trustee under sections 363(c) and 364 — the debtor steps into the trustee's position there, limits included. Second, subsection (b) is subject to such limitations or conditions as the court prescribes, which the text leaves undefined and case-specific. Third, the whole permission opens with "unless the court orders otherwise." Section 1304 does not state what would prompt a court to order otherwise, who may ask it to, or what procedure would follow. Those questions are answered elsewhere in the Code and by the court handling the case. The limits themselves are stated in sections 363(c) and 364; subsection (b) only points to them rather than restating them.

What duty does subsection (c) add for a self-employed filer?

Subsection (c) provides that a debtor engaged in business shall perform the duties of the trustee specified in section 704(a)(8). "Shall" is mandatory language, and the duty is stated entirely by cross-reference — subsection (c) does not restate what section 704(a)(8) requires, so the content of that obligation is found in that section, not here. Subsection (c) is the counterpart to subsection (b). Where subsection (b) places certain trustee powers with the debtor, subsection (c) places a trustee duty there as well. Section 1304 assigns no other trustee duty to the debtor; it names one subsection of section 704 and stops. A debtor who is not engaged in business as subsection (a) defines it falls outside subsection (c) by its own terms, since the sentence begins with "a debtor engaged in business."

What does section 1304 not cover?

The three subsections work as a set, and the set is narrow. Subsection (a) supplies the definition; subsections (b) and (c) apply only to a debtor engaged in business, so the definition controls whether the rest of the section is in play. What the section addresses is operation of the business and one cross-referenced trustee duty. What it does not address is everything else: it says nothing about eligibility to file, about plan payments, about how business debt is classified or treated, or about what happens to business assets. None of that appears in this text. For anything the section does not state, the answer sits elsewhere in the Code — and the places this section points to directly are sections 363(c), 364, and 704(a)(8).

This summary is our plain-English explanation, written to help you find the right part of the text below. The section itself is the authority — where the two differ, the text controls.

Text of 11 U.S.C. § 1304

Reproduced in full from the official source, verified as of July 2026. View it at the source.

(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.

(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.)

Notes and amendment history

Published by the official source alongside the section above. These notes record how the text has changed over time and the reasoning behind those changes. They are not the operative rule — the enacted text is the section itself.

Historical and Revision Notes

legislative statements

Section 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. 95–989

Increased 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 Notes

Amendments

**2010**—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 Subsidiaries

Effective Date of 1984 Amendment

Amendment 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.

Guides that rely on 11 U.S.C. § 1304

Plain-language explanations on this site that cite this section.

By Antonio G. Jimenez, Esq. · Florida Bar No. 21022

Last reviewed July 26, 2026 · Sources verified July 26, 2026 · How we verify

Every figure on this page is drawn from a primary legal source and checked against our canonical legal database before publication. Bankruptcy.law is not a law firm and does not provide legal advice.

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