The process of filing for commercial bankruptcy in North Carolina depends on what type of bankruptcy you choose. There are options for all types of business structures, including sole proprietorships. Farmers and fishers also have a special type of bankruptcy they can file.
In this type of bankruptcy, the trustee in charge of your case will liquidate your business to pay off your debts. You must terminate your business when you file a Chapter 7 bankruptcy. Sole proprietorships could receive a discharge of both business and non-business debts.
You could reorganize your business with a Chapter 11 bankruptcy. It would involve restructuring your debts. Businesses could pay their taxes over a longer time period and pay unsecured debts at a lower price. You would have to sell unneeded assets to help pay back your creditors, and the bankruptcy court will oversee your business operations.
Only individuals can file for Chapter 13 bankruptcy; LLCs and corporations don’t qualify for this type of commercial bankruptcy. You must have a steady income to file for Chapter 13 business bankruptcy. North Carolina allows you up to five years for repaying your debts with Chapter 13. You could reorganize your debts and create a payment plan. North Carolina gives you the option to continue operating the business if you think it will recover through reorganization.
Family farmers and family fishers have the option to file Chapter 12 bankruptcy. At least 50% of your debt must be from the business’s operations if you own a farm. For those in the fishing industry, at least 80% of the debt must be from fishing operations. You could keep the land, equipment and other belongings that you need to operate your farming or fishing business. Both individuals and entities can file Chapter 12 commercial bankruptcy. You could modify the terms of your loans with Chapter 12 bankruptcy. Creditors have to stop collection efforts, so they can’t continue with foreclosures, repossess equipment or contact you about repayment.
Consider your options in commercial bankruptcy to make the choice that’s best in your situation. It’s difficult to shut down your business, but take an objective look at whether it’s worth it to continue. You could start a brand-new business with the lessons you learned.