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There are many bankruptcy options for self-employed individuals if their debts overwhelm their capacity to pay.

Facing the prospect of filing for bankruptcy can be daunting. At a time when you are under severe financial stress, you have to figure out if seeking legal protection from your creditors is the right move and what are the long-term effects of doing so. Your decision may be further complicated if you are self-employed as an independent contractor or sole proprietor of a small business.

Filing bankruptcy should not be undertaken lightly. Whether you qualify for having your debts wholly discharged through the liquidation process of Chapter 7 or have the resources to pay some of the debts through Chapter 13, understanding your bankruptcy options is essential. Self-employed bankruptcy is even more complex because which chapter you file is determined based on income.

When you have exhausted your resources, the benefits of filing bankruptcy often outweigh the risks. We aim to help you achieve freedom from debt and start fresh. Let us evaluate your current financial situation and discuss the options available so you can regain control today. Further, our team of experts at the Law Offices of Ronald E. Stadtmueller can help you sort through your financial issues to find the best solution. For a free consultation, call (858) 564-9310 today for an appointment.

Income Verification for the Self-Employed

Just like regular wage earners who work for others, self-employed individuals are eligible to file bankruptcy if their debts overwhelm their capacity to pay. But employees that receive W-2 wage statements from employers have a convenient record of their wages. This is important because when filing for bankruptcy, you must present the court with evidence that verifies your income six months before your filing date. Your payment in that pre-filing period determines if you qualify for Chapter 7 via the means test or must file Chapter 13.

Verifying income is more difficult for the self-employed because you may not be paid regularly, or payments were not well-documented. In addition, if you own a business, you may not be taking any wages. By working with our bankruptcy attorneys, we can help you calculate your income so that there is no risk the court dismisses your self-employment bankruptcy.

Besides tracking your income and expenses, even with simple spreadsheets or free online software programs, you must keep documents that will help verify your payment. The court will provide these documents to back up your self-created records. 

Another resource for help with income verification is an accountant. Discussing your situation with a financial professional is a good idea if you are considering bankruptcy. You may get helpful tips to assist you in gathering the documents you need.

Additional Considerations for Self-Employed Bankruptcy

Working with bankruptcy counsel before filing will make for a smoother process. It helps you avoid making any mistakes that threaten the successful discharge of debts through Chapter 7 or the completion of a Chapter 13 repayment plan. For example, some laws restrict the transfers of assets and preferential payments to creditors right before filing bankruptcy. The Law Offices of Ronald E. Stadtmueller, San Diego’s Law Firm Bankruptcy, will take you step-by-step through a self-employed bankruptcy so that you remain compliant with the process.

Consider as well that if you are also a single proprietor of a small business, you need the advice of our experienced bankruptcy attorneys. Not only might there be confusion about your income, but you must also sort through personal versus business assets carefully. The value of your business could make a difference as to what bankruptcy chapter you file as a self-employed individual or if you would be better off filing Chapter 11, which typically deals with business debts.

We Can Help with Bankruptcy for the Self-Employed Bankruptcy is a legal option for the self-employed, but it is more complicated than for regular wage earners. The bankruptcy lawyers at The Law Offices of Ronald E. Stadtmueller have many years of experience helping self-employed clients understand their bankruptcy options. Trust us, for we draw on over 30 years of experience guiding clients in California through bankruptcy. Allow our attorney to help you regain a firm financial footing. If you are considering bankruptcy, call us today at (858) 564-9310 to schedule a free consultation.

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