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Can You File for Bankruptcy If You're Self-Employed? June 1, 2019

Downtown Honolulu, Honolulu
Can You File for Bankruptcy If You're Self-Employed?, Honolulu, Hawaii

Owning a business or operating as an independent contractor often requires taking economic risks, and unfortunately, the debt sometimes incurred in the process can become overwhelming. That’s when bankruptcy is an option. Although the self-employed typically find it more difficult to file, they can seek debt relief through bankruptcy just like anyone else. If you work for yourself and are thinking about filing, here are some factors you should understand before moving forward.

Providing Proof of Income

debt reliefBefore filing for bankruptcy, you’ll need to provide proof of income for the last six months. While employees can provide paystubs to demonstrate their earnings, this isn’t an option for business owners and independent contractors.

Financial records and profit and loss statements won’t be sufficient to satisfy your income verification requirement either. You must gather additional supporting documents, such as bank statements, check stubs, tax returns, invoices and contracts, and signed statements from cash payments.

Why Accuracy Matters

As a self-employed individual, verifying your income with the bankruptcy court will take some extra effort, which can make the filing process more complicated. You must ensure your income statements are accurate since they will be used to determine your eligibility for Chapter 7 bankruptcy, for which you’ll have to pass a means test that shows you don’t earn enough to pay back your creditors.

If you plan to file for Chapter 13, the court will use your income details to decide how much of your debt needs to be repaid. Providing incorrect information, whether intentional or not, may affect your ability to obtain debt relief and can make it look like you’re attempting to commit fraud. 


If you’re self-employed and filing for bankruptcy, consult Greg Dunn, Bankruptcy and Debt Relief Attorney. He has successfully represented debtors in Honolulu, HI, for more than two decades. If you decide to file for bankruptcy, he will walk you through the process from beginning to end and ensure you have all the documentation necessary to achieve your debt relief goals. Call (808) 524-4529 to set up a consultation, or visit him online to learn more about your filing options.

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