Whether you are a sole proprietor or independent contractor, running a business is no easy task. With so many factors in play, sometimes you may find yourself low on income and high on debt. When this happens it’s likely that you’ll want to protect yourself from creditors who will undoubtedly come after you for their money. For this reason – and others – you may make the hard choice to file for bankruptcy.
When you find yourself on the verge of filing, it’s important that you first understand all of your options. Since the chapter of bankruptcy that you choose is based on your income, it becomes more complicated for those who are self-employed. If you qualify for Chapter 7 bankruptcy, the liquidation process may help to discharge all of your debts, whereas if you file for Chapter 13 bankruptcy, you may then have the necessary resources to begin paying down your debts.
Organization Is Key
Self-employed individuals have the option of filing for bankruptcy if their debt is much higher than their ability to pay it. Whereas W-2 employees automatically have a record of their earnings, it’s not quite so easy when you’re self-employed. This is because those who are self-employed rarely make the same income month over month. Also, for some business owners, the money made is put back into the business rather than taking a salary. This is why it is so important for self-employed workers to keep clear and organized documentation of all payments received.
Verifying Your Income
In determining which chapter of bankruptcy that you qualify for, you are asked to provide the court with evidence to verify what your income has been for the six months prior to filing. This is where your organization will come in handy. Using a software program like QuickBooks or even a spreadsheet can help prove your income to the court. Other documents that are generally very helpful in verifying your income include:
- Copies of Checks
- Tax Returns
- Cash App/PayPal Records
- Emails or Texts that Show the Payments
- Cash receipts
- Bank statements showing all deposits (checks and cash)
Toronjo & Prosser Law Helps Those Who Are Dealing with Bankruptcy
When you are going through the bankruptcy process, it’s in your best interest to consult with a knowledgeable and experienced Texas bankruptcy attorney. He or she can help you to identify important documents needed to file for bankruptcy as well as help you to avoid mistakes that could really cost you.
It’s undoubtedly stressful to realize that you don’t have enough money, and even more stressful when you realize that filing for bankruptcy may be your best option. However, it’s important to remember that the process of filing for bankruptcy can be extremely complex and confusing. That’s why it’s so important to consult with a qualified Dallas bankruptcy attorney. At Toronjo & Prosser, our qualified Texas Bankruptcy Attorneys can help you to navigate the process. To learn more or to schedule a free consultation contact us online or call us today!