For most business owners in North Carolina, filing for Chapter 7 bankruptcy might seem like the best option when they can’t get ahead of their business debts. However, many people don’t realize that they can file for Chapter 13 bankruptcy. While businesses aren’t eligible for Chapter 13, business owners can file for Chapter 13 and use the process to protect their business assets.
Why should business owners consider filing for Chapter 13?
When a business owner files for Chapter 7 bankruptcy, they essentially lose everything. Business assets like their storefront and company car are sold off to pay their business debts. They walk away debt-free, but they have to start from scratch.
Conversely, Chapter 13 bankruptcy allows individuals to to keep running their business while they pay off their debts. Instead of selling off their assets, they’ll restructure their debts to make them easier to pay off.
However, this option is only recommended for people who have a chance at making their business profitable again. If they file for Chapter 13 and still can’t make enough money to pay off their debts, they might realize that they wasted their time and money, and in the end, they’ll have to sell off their business assets anyway. But if they manage to pay off their debts, they’ll be able to get back on their feet and continue running a profitable business.
Where can business owners get help with filing for bankruptcy?
An attorney might help business owners file for bankruptcy. The attorney may answer their questions and help them figure out which type of bankruptcy is right for their situation. They may help their client file for bankruptcy, sell off their assets and restructure their debts so that they can pay them off.