Over the years, many people have referred to Chapter 13 bankruptcy as the “wage earner’s plan” because it provides debt relief based on the income that a filer is expected to earn. During this legal process, a repayment schedule lasting three to five years is carefully created so that filing parties can bring down their debt while meeting their necessary living expenses. However, so-called “gig workers” and other self-employed individuals might not know how much income they’ll take in during a given month. Is it possible for these individuals to establish a Chapter 13 repayment plan given the uncertainty regarding what they’ll be earning?
To file for Chapter 13 bankruptcy, self-employed individuals must provide detailed financial documentation, which may include one or more of the following:
- Two years of personal and business bank account statements to provide a factual framework of the filer’s income and expenses. The look-back period should guard against misinterpretations regarding someone’s financial status based on a particularly good or bad month.
- Two years of invoices, contracts, check stubs and receipts are required because gig workers might sometimes have cash inflow and outflow that is not reflected within their bank accounts.
- Two years of federal tax returns (or tax transcripts) must be submitted to the court to provide a comprehensive view of your financial situation.
In addition to providing documentation, gig workers and self-employed individuals must meet the income requirements for Chapter 13. The court uses the means test figures and Schedule I amounts to determine whether you have sufficient disposable income to fund a viable repayment plan. This means you must earn enough to cover your living expenses and make regular payments under the plan. By analyzing your income history, the trustee and court can determine a reasonable income expectant for the coming years.
While the process may seem daunting, Chapter 13 can be a powerful tool for self-employed individuals to manage debt and protect their assets. Working with an experienced bankruptcy attorney is essential to ensure you meet the requirements and successfully navigate the process.
At Jeff Field & Associates, we help gig workers and other self-employed individuals explore their bankruptcy options. Contact us today to schedule a consultation and take the first step toward financial relief. For a consultation, please call 404-381-1278 or contact us online. Our offices are in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Scottdale.