In these tough economic times, it has been well-reported that many jobless Americans are turning to their own devices in order to makes ends meet. But, even self-employed self-starters sometimes need to turn to bankruptcy solutions as a way to get out from under mounting debts.
In part one of the series, “Making Bankruptcy Work for the Self-Employed,” we introduced the basics of what savvy entrepreneurs need to know when pursuing the debt dissolution solutions that bankruptcy provides, including providing proof of income and tax returns, and monitoring major income fluctuations. In part two, we share even more tips of the trade so that self-employed individuals who fall on hard times at any point in the business-building process can also take their financial future into their hands through bankruptcy.
Tip #1 – Cut Short the Co-mingling of Business and Personal Finances
In order to better protect your personal finances and make the most of your bankruptcy, it is of the utmost importance to avoid commingling your business and personal finances. Not only should you keep them separate prior to your bankruptcy filing, but also make every effort to keep close track of any and all business expenses and income while at the same time keeping your private finances in order.
Tip #2 – Making Sure You Know What You Owe
In order to make your bankruptcy work best for you, it is essential that you include ALL of your debts in your bankruptcy filing to have them discharged, including any and all outstanding debts owed to creditors, employees and suppliers. In order create a complete accounting of these debts, it is important to round up all of your business expense documents such as vendor contracts, credit agreements and employee contracts.
Tip #3 – Get an Accurate Accounting of Your Monthly Income
As mentioned in part one of this series, a bankruptcy court will evaluate your income based on the 6-month period prior to your bankruptcy filing. During this filing period, it is important to avoid overstating or understating your monthly income, instead providing the most accurate income figures available to avoid dismissal of your case. As a result, if necessary, consult with an accountant prior to your bankruptcy filing. Their assistance in calculating your correct monthly income can be the difference between a successful bankruptcy filing and an untimely end to your bankruptcy benefits.
Tip #4 – Avoid the Transfer of Assets
When some people file for bankruptcy, whether for their business or personal reasons, they often transfer assets to friends, family or associates in an effort to protect them from the bankruptcy trustee. But it’s important to understand that at the point when you know you’re bankruptcy bound, it is essential to hold onto these assets at all costs. Even if the transfer is completely in good faith, the transfer of assets to someone else or even to another business entity before filing bankruptcy could reflect bad faith to the bankruptcy court, jeopardizing your successful case.
Tip #5 – Get the Best from the Bankruptcy Process with a Bankruptcy Attorney
Bankruptcy provides many options for self-employed debtors. There’s the possibility that a personal bankruptcy under Chapter 7 or 13 may be the prime choice; however, if you have greater assets (or debts) a Chapter 11 business bankruptcy may be the name of your bankruptcy game. But regardless of which bankruptcy you could choose, getting the most financial bang out of your bankruptcy takes precious time and particular skills to handle paperwork, creditors, trustees and legal decisions. As a result of the nuances and intricacies of bankruptcy law, it is essential to begin the bankruptcy process with assistance. An experienced bankruptcy attorney knows the ins and outs of the bankruptcy process and can assist throughout your case, no matter what your individual situation. Contact the Law Offices of John T. Orcutt in North Carolina TODAY for a totally FREE debt consultation. Just call toll free to 1-888-234-4181, or make your own appointment online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.