Even the best-run businesses can run into financial difficulty, and you may be one of the many self-employed people in Ohio struggling to meet expenses. If you find yourself with bills and debts piling up, and you are being harassed by creditors, there is help available.
Bankruptcy, a legal way to have many debts forgiven, can put you and your business on the road to financial recovery. Filing can allow you to keep running your business, stop creditors from harassing you and seizing your possessions, allow debts to be forgiven, and provide a way for you to keep your assets and begin to rebuild your business and your life.
However, if you are self-employed or an independent contractor and planning to file for bankruptcy, the procedure is a bit more complicated. You will have to verify your income and you might have to complete a “means test” to determine and prove your average income for the prior six months.
The skilled and seasoned Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer offer a free consultation to evaluate your financial situation. We can help determine if you qualify to file a Chapter 7 bankruptcy under the means test or if a Chapter 13 repayment is required and will recommend a plan that will get you on the road to financial stability.
The United States Bankruptcy Code provides several ways for individuals to file bankruptcy.
Your income and debt will be subject to a “means test” to determine if you qualify for Chapter 7. If you are not eligible, filing for Chapter 13 may still be an option.
There are advantages and disadvantages to filing under the various chapters, and you will still be responsible for certain debts, including child support, spousal support obligations, student loans and most unpaid taxes. However, bankruptcy can eliminate credit card debt, medical bills and unsecured loans, and stop harassment by creditors.
The “means test” is used to determine whether an individual’s monthly income is too high to qualify for a Chapter 7 bankruptcy. You must report and document your average income for the six months prior to filing, and the bankruptcy court compares that income to the median income for Ohio. It then deducts specific monthly expenses to arrive at your monthly net disposable income to see if you can file Chapter 7. You can file Chapter 7 if your gross income is below the Ohio median for your household size.
If you are self–employed and your debts are primarily business-related, you don’t have to take the means test and can file a Chapter 7 bankruptcy even if you have substantial monthly income.
For a Chapter 13 bankruptcy, the means test will determine the terms of your plan, such as how long it will last and how much you must pay to nonpriority, unsecured creditors.
If your income is over the Ohio median income for a household your size, then you must complete the means test by calculating your income and expense information from your own personal records. Income includes: business income, rental income, interest and dividends, pensions and retirements plans, amounts paid by others for your household expenses, unemployment income, etc.
If you are self-employed, it can be more difficult to determine average income, since business income may be irregular and undocumented. Unfortunately, failure to provide documentation or an incorrect calculation can result in dismissal of the bankruptcy case. This is an area where the skilled Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer can help keep you from making mistakes.
If you are self-employed and considering bankruptcy, get your paperwork in order and immediately begin tracking and documenting your income.
1) Track Income
Keep regular records of income and expenses and create profit and loss statements. Provide back-up documentation, as your records may be questioned by the courts.
2) Provide Supporting Documents. These include:
If you’re self-employed, it’s particularly important not to undergo the bankruptcy process alone. At Fesenmyer Cousino Weinzimmer we provide a free initial consultation where we will evaluate your entire financial situation. We examine your income, your debts and your goals, and then discuss the best options for you. If bankruptcy is the right step, we are there to file for you, represent you in court, help rebuild your credit and fight for you every step of the way.
Delaying can only make matters worse, so call the experienced Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer today. Call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or contact us online for your free consultation so we can determine what debt relief solutions will work best for you.
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