Submitted by Rachel R on Wed, 06/01/2016 - 11:38am
Is your North Carolina business struggling?
Image Source: Flickr CC User Larry & Teddy Page
New bankruptcy statistics were released recently from the American Bankruptcy Institute showing that from May 2015 to May 2016, business bankruptcies have increased a whopping 32%. And it’s not just May that was up – data shows that filings have been on the rise since November 2015.
Although business bankruptcy is up, overall bankruptcy is down which means that consumer bankruptcy filings (i.e. personal bankruptcy) are down. The businesses most likely to file for bankruptcy protection are in the energy and retail division, according to the latest statistics.
Data also shows that bankruptcy filings were highest, on a per capita basis, in Tennessee, Alabama, Georgia, Illinois, and Utah. The good news is that North Carolina did not make that top five list, but there are still businesses struggling with debt in our state.
What Can Business Bankruptcy Do for You?
If you’re a small business owner, Chapter 7 or Chapter 13 are the two chapters you would usually choose between when seeking bankruptcy protection. Here’s a quick look at the differences.
Chapter 7 small business bankruptcy facts:
Chapter 13 small business bankruptcy facts:
What Are the Downsides of Business Bankruptcy?
While both Chapter 7 and Chapter 13 offer benefits to sole proprietors struggling to keep their businesses afloat, there are also downsides. Here’s a look at the drawbacks for each chapter.
Chapter 7 small business bankruptcy disadvantages:
Chapter 13 small business bankruptcy disadvantages:
When Can a Business File Chapter 11?
Chapter 11 is the business bankruptcy chapter you usually hear about on the news when a big business is struggling or goes belly up. For instance, Sports Authority is in Chapter 11 right now, and Blockbuster Video went through it.
Chapter 11 is used by corporations, LLCs and partnerships that want to try and stay in business but need help dealing with their debt. The business continues to operate and makes payments on a plan to meet creditor obligations. This is called a “reorganization.”
If the company cannot keep up with payment plans, or it becomes obvious that there’s no way to salvage the business, Chapter 11 can be converted to a corporate Chapter 7 to shut the business down, liquidate assets and pay off creditors according to their priority and to the extent possible.
Is Your North Carolina Business Struggling?
If you own a small business and you’re struggling, come in for a free North Carolina business bankruptcy consultation at the Law Offices of John T Orcutt. Call +1-919-646-2654 now for a free no-obligation appointment at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.
We can take a look at your business income, assets and liabilities and let you know if bankruptcy is an effective option for your business or you personally and, if so, which chapter might be best and how it will affect you personally and professionally.
Debts Hurt! Got debt? Need help? Get started below!
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