Trying to keep up with overwhelming debt is never easy – especially if you are self-employed. Thankfully, there are debt-relief options, such as bankruptcy, that can help you get your business and finances back on track. However, filing for bankruptcy can be a bit more complex for those who are self-employed. Our Los Angeles bankruptcy attorneys explain what you should know about the bankruptcy filing process if you are self-employed.
What You Need to Know
Regardless of the type of bankruptcy chapter you file for, you will need to prove your income. Individuals who work as employees can present their W-2 forms to show proof of their income. However, it might not be as easy for self-employed workers. The bankruptcy court asks for proof of your income to verify that you, in fact, don’t have sufficient funds to pay your debts without bankruptcy assistance.
If you file for Chapter 7 bankruptcy, the bankruptcy court will only accept your application if you don’t make enough money to pay your debt back. However, if you want to file for Chapter 13 bankruptcy, you will need to prove that you have just enough money to make monthly payments until the rest of your debt is discharged.
How to Verify Your Income
If you are self-employed and own a business, you will likely need to use a computer program to track your inventory, sales, income, and expenses that determine how much money you actually take home each month. Although a computer program will help you and the court understand how much money you make from your business, you will need other documents to prove your financial situation. You will need to provide the following information:
- Bank statements that show deposits & withdrawals
- Receipts for anything cash-related
- Copies of checks
- Paypal or other app payments
- Any other related financial documents
If you need help applying for bankruptcy, contact our Los Angeles bankruptcy lawyers today at (800) 996-9932 to schedule a consultation!