Chapter 13 bankruptcy can help self-employed people who have unpredictable income. It lets them create a plan to repay their debts in a way that fits their situation. This can help them get their finances back on track. But having an income that goes up and down can make the process tricky.
Payment plans that fit changing income
People who work for themselves often don’t make the same amount of money every month. Chapter 13 bankruptcy allows them to make a plan based on how much they expect to earn. If they show the court a good record of their past income and make realistic predictions, they’re more likely to get a plan approved that works for their needs.
Keeping track of money and reports
Chapter 13 bankruptcy requires sticking to a strict budget that the court approves. Self-employed people have to carefully track how much they make and spend. They also have to send regular updates to the person in charge of their case. This can take extra effort, but it helps them stay organized and meet their payments.
Keeping business tools and equipment
Unlike Chapter 7 bankruptcy, Chapter 13 doesn’t force people to sell their business tools or equipment. This means self-employed workers can keep the things they need to keep earning money. This is really important for staying in business while paying off debts.
Paying off taxes and other debts
Taxes can be a big problem for self-employed people. Chapter 13 bankruptcy can include tax debt in the repayment plan. Some types of taxes, like recent income taxes, must be fully paid back. But the payment plan makes it easier than handling creditors one by one.
Chapter 13 bankruptcy helps self-employed people deal with their debts without giving up their ability to make a living. By sticking to the plan, they can set themselves up for a better financial future.
