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Business owners must manage their bills, payroll, and invoices while also keeping their business functioning. Sometimes, this becomes difficult or impossible, and filing for bankruptcy may be the best option. Whether you want to close your small business in North Carolina or reorganize your debts so that you can keep working, filing for bankruptcy could help.
Depending on the particular chapter of bankruptcy you qualify for and opt to file, you may be able to modify your payments or eliminate your balances. Working with our North Carolina bankruptcy attorney can help you understand the best choices for your business, how this could affect your business and personal finances, and more.
What Are Your Options for Small Business Bankruptcy Protection?
Whether bankruptcy will help your business and which type is the best option for you will depend on several factors. Consulting an attorney familiar with how small business bankruptcy works may be a good idea if you have questions about your qualifications, options, or possible impacts on other areas of your life.
Some things you should consider before deciding to file for bankruptcy include:
- Do you hope to close your small business or continue operating it?
- Is your business a sole proprietorship, corporation, limited liability company (LLC), or another type of organization?
- Will you be personally liable for any outstanding debts despite filing bankruptcy for your small business?
- How much debt do you have? Who do you owe? Is it secured or unsecured?
When it comes to business debts, you may be able to file Chapter 7, Chapter 13, or Chapter 11 bankruptcy. Family farms or fisheries may also use Chapter 12.
Which Type of Bankruptcy Is the Best Fit for Your Small Business in N.C.?
It may be difficult to choose how to file your bankruptcy. You may want to work with a lawyer from our firm who can explain your qualifications and the pros and cons of each type in more detail. Contact bankruptcy lawyers now for free consultation.
In general, Chapter 7 is likely only a good option if you plan to shut down or the business is not worth much. It discharges debt instead of allowing you to repay it and keep your assets. On the other hand, Chapter 13 and Chapter 11 provide options for refinancing your debt and allowing you to keep your business operating.
Chapter 13
There is a limit to how much outstanding debt you can have and qualify for Chapter 13. However, if you meet these qualifications, it may be the best way to reorganize your finances and allow you to keep working. This creates a repayment plan that will apply over the next three to five years.
Chapter 11
Chapter 11 has more flexibility than Chapter 13 and generally works better for larger companies or those that cannot meet the debt limit of other types. Since 2019, the Small Business Reorganization Act (SBRA) has significantly reduced the cost of Chapter 11 bankruptcy, making it a possibility for more small businesses.
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Are You Personally Responsible for the Debts of Your N.C. Small Business?
How your personal accounts are intertwined with your business income and debt is often a complex topic. However, it’s something you will need to have a good understanding of before you file your petition for small business bankruptcy in North Carolina.
If you are a sole proprietor, you may be personally responsible for all your business’s debt. This can be an especially scary and stressful position if you do not have support and someone to guide you through this process.
Some people also have personal stakes – in addition to the need for regular income – in their business, even if it is an LLC or a corporation. This could include shared real estate or other property, personal money spent for assets, loan guarantees, and more.
Our Attorney Can Make Your North Carolina Small Business Bankruptcy Easier
When you opt to enlist the help of our North Carolina bankruptcy law firm, they can offer advice and guidance based on your case’s specific details. This could include:
- Evaluating which type of bankruptcy best fits your needs
- Advising you about your options based on your debt and assets
- Answering your questions about this process
- Helping you prepare your petition and supporting documents
- Protecting your personal assets, when possible
- Representing you throughout this process
If you have concerns about the health of your business or your personal finances during and after filing for bankruptcy, consider hiring our business planning lawyer to handle the process. We will use our legal experience to help you as you weigh your options and consider your next steps.
Discuss Your Options with Farmer & Morris Law, PLLC, Today
The bankruptcy attorneys from Farmer & Morris Law, PLLC, are here to help if you are considering small business bankruptcy. We serve clients from our North Carolina offices in Rutherfordton, Morganton, and Shelby.
Call (828) 286-3866 today to learn more about our services and how we help small business owners in North Carolina.
