If you are self-employed and considering filing a Chapter 7 or Chapter 13 bankruptcy case, it is important to understand there are a few unique factors that should be considered before you file. You should confer with a knowledgeable personal bankruptcy attorney for assistance.
What makes a bankruptcy filing unique for a self-employed individual is that calculating your monthly income can be more difficult. For bankruptcy purposes, a debtor’s monthly income is the average monthly income for the six months preceding the filing date. For employees that receive a W-2 form from their employer, this is fairly simple. They can provide their paystubs to establish their income. In contrast, a self-employed individual typically has an income that fluctuates from month to month and it is not as easy to document.
Below are a few tips for the self-employed individual to consider before their bankruptcy petition date:
· It is important to confirm that your business and personal finances are separate.
· If you are not certain how to figure your monthly income, get help from a bankruptcy attorney or your accountant. It is important to present an accurate statement of your income to the bankruptcy court. If you understate your income, it could lead to your bankruptcy case being dismissed.
· Organize your business records. This includes contracts with vendors, credit agreements and any other type of contract. If you want the debts owed to business creditors to be discharged in your bankruptcy filing, you must list them in your schedules.
· Do not transfer any assets to other parties prior to your bankruptcy filing. Any type of transfer, even legitimate ones, will be thoroughly investigated as fraudulent transfers and can cause problems as well as delays in your case.
The most important piece of advice, however, is to seek the advice and counsel of an experienced bankruptcy attorney. We can review your individual finances and help you establish the best strategy for dealing with your debt.
If you are interested in learning how filing a bankruptcy case can benefit you, contact Levitt & Slafkes, P.C., at 973-323-2953. You can also reach us by filling out our online form. We represent debtors in Chapter 7, Chapter 13 and Chapter 11 filings. Let us help you get the fresh financial start you need today.