Can I File For Bankruptcy If I Am Self-Employed Or Run A Small Business?

Of course you can, you will likely just face a few more challenges in calculating and projecting your income than the typical wage-earner who has regular paychecks.

If you are truly self-employed, meaning that you have not created a separate business entity (LLC, PC, etc.) for the business, then you are subject to the same requirements as any other individual filing for bankruptcy protection. All of the assets and liabilities are yours personally and are treated as they would be in any other consumer bankruptcy case. Typically, the only complication is gathering and presenting the required proof of income and expenses. Since you do not have ordinary paychecks, you will likely need to provide some sort of monthly profit & loss statement to your attorney so they can effectively complete the forms and schedules. If you do not do this regularly, there are countless free versions available online that you can download and populate. You do not need to be a CPA to complete these, just ensure that they include all income and expenses for the past six calendar months. From these, you should be able to easily derive a projected budget.

If you created a separate business entity, then the situation becomes a bit more complicated. If the assets are owned and liabilities owed exclusively by the business entity, then it is the entity that will likely need to file for bankruptcy. You may also need to file for personal bankruptcy, as many small business loans and lines of credit will have required that you personally guarantee the debt.

The Bankruptcy Code has several specific provisions for small-business owners and self-employed individuals, so you will want to have an experienced bankruptcy attorney guide you through the process.

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