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Working as a Freelancer? Bankruptcy Issues to Consider

Posted on in Bankruptcy

Working as a Freelancer? Bankruptcy Issues to Consider

Working as a freelancer has a lot of perks. For an increasing number of Americans, perks like making your own hours, working from the comfort of your own home, and not having to comply with company rules and procedures make freelancing an attractive career choice. But the freelance life is not all Skype meetings and romantic notions of working from a busy coffee shop. It can be fraught with issues like economic uncertainty and a lack of the financial safety net of unemployment insurance, which can lead to a dependence on credit cards.

In many cases, a dependence on credit cards is the first step toward filing for bankruptcy. If you need to file for bankruptcy, do not feel ashamed to do so – it can be a life-saving tool. It is much easier to avoid having to file for bankruptcy by avoiding insurmountable debt.

Your Company Type Determines How you May File

If you are a sole proprietor, you and your freelance business are legally the same entity. This means that you can file for Chapter 7 bankruptcy if you qualify for it or Chapter 13 if you do not. If your business is a corporation or a limited liability company (LLC), you must file for Chapter 11. Each type of bankruptcy has specific requirements for the filer, which your attorney can explain to you in greater detail.

It Can Be Difficult to Verify Your Income

Any individual who files for bankruptcy must verify his or her income with the court. For a self-employed individual, this can be more difficult than it is for an individual in an hourly or salaried position. You will need to provide pay stubs, invoices, and contracts to prove the amount of money you made over the previous year. This is why it is important to keep a very detailed record of every document you handle as part of your business.

Stability is Key

With Chapter 11 and Chapter 13 bankruptcy, the filer works to develop a plan to repay his or her debts. With Chapter 11, it is a reorganized business plan. With Chapter 13, it is simply a plan to repay his or her creditors with his or her income. Having your plan approved by your creditors and the court hinges greatly on its feasibility – if your business is stable, this will be much easier for you.

Illinois Bankruptcy Attorneys Can Help

If you are reaching a point with your debt where it has or soon will become unbearable, consider filing for bankruptcy with assistance from an experienced Illinois bankruptcy attorney. At Newland & Newland, LLP, we are equipped to guide you through this process and advise you about the right choices to make as you work toward financial independence. Do not wait to contact us and schedule your free legal consultation with our firm – the sooner you can get a handle on your debt, the easier it will be to get rid of it.

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