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Self-Employed People Can File Bankruptcy Too

July 21, 2010

There are many strange misconceptions regarding bankruptcy.  Some believe that a person is unable to file bankruptcy if the debtor is employed.  Another myth is that self-employed people can’t file bankruptcy. These myths can prevent a person from obtaining needed relief from overwhelming debt. Free Consultation 

Employment is not a precondition for filing for bankruptcy protection.  The bankruptcy laws require that the debtor state all income for the past six months and list his or her current income.  This income information is used to calculate the debtor’s ability to pay creditors.  If the income information demonstrates that the debtor is able to pay a substantial amount to creditors over a five year period, the debtor may be ineligible to file Chapter 7 (a liquidation bankruptcy) and must file Chapter 13 (a repayment bankruptcy).  Most employed debtors are able to produce the required income information from pay stubs, W-2s, and employer records. Free Consultation 

Self-employed debtors must also produce income information for the six months prior to the bankruptcy filing and show current income.  The bankruptcy trustee will require a self-employed debtor to show net income (gross business profit minus necessary business expenses).  If you are self-employed and considering bankruptcy, it is time to start gathering income and expense information.  If you do not already keep track of your business finances in a ledger or with computer software, it is time to start.  You may have to recreate your income through bank records, and your expenses through receipts and memory. Free Consultation 

If you are struggling with a debt problem that you cannot overcome, consult with an experienced bankruptcy attorney.  Whether you are employed, unemployed, retired, disabled, or self-employed, an experienced bankruptcy attorney can suggest solutions that will end your debt nightmare.  The federal bankruptcy laws are very broad and can help you and your family to a fresh financial start. Free Consultation

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