Underemployed due to pandemic, could use some advice on filing Bankcruptcy.

[LiveFree]

I am a self-employed independent contractor (sole proprietorship) and I have had very little work since the pandemic started. My state does not offer unemployment insurance for self-employed people as has not had the infrastructure in place do distribute the federal unemployment funds and I have not received the stimulus check so I have had very little income for nearly 2 months, other than child support payments made to me (around $90/ week). My net income was around 20k / year. My debt was managed before the pandemic but I have had to live off of credit and am now in too deep. I do expect business to pick back up eventually but I am in position of debt now that I will not be able to sustain. I filed Chapter 7 pro se 7 years ago so I know I cannot be granted a Chapter 7 discharge until around mid 2021. I am unfamiliar with Chapter 13.

I have somewhere around 10k in personal debt and 3-4k in tax debt. I do not have any secured debts besides my home mortgage which is less than a year old. I do not have any significant assets. Some work tools, my primary vehicle which is paid off, and an old work vehicle that is broken down and not worth much of anything, and an old motorcycle.

Any suggestions on how to proceed would be greatly appreciated. I'm not sure how much an attorney would cost but I may be able to get a loan from a family member to get an attorney if Pro Se would not be feasible. Thank you for your input.

[LiveFree]

I forgot to mention I also have a lot of student loan debt but I know that is not able to be discharged.

[sophieanne]

Hi..I'm very sorry for your situation. Perhaps you could call around to speak to a bk lawyer for some advice?

[LiveFree]

I was hoping to get some input from people here on the forum before going with an attorney.

[shipo]

I was hoping to get some input from people here on the forum before going with an attorney.

Here's the problem with asking here; unless someone is a bankruptcy attorney in your district, then any answers gleaned from here, even if 100% correct, may be incorrect for your specific region and Trustee. Your best bet is to talk with a few attorneys first, get their feedback, and then compare notes here.

[flashoflight]

13's are designed for folks with regular income such as wages for a partial debt repayment plan. If you don't have regular income of some kind resulting in disposable income that will last the 36-60 months, you can't really do a 13. Sole proprietors with disposable income coming in have a hard time with 13's because the plan payments are regular while the accounts receivable is not.

[justbroke]

flashoflight is on the money, no pun intended. Chapter 13's work best if you are not self-employed, don't own any businesses, and have regular income. Now, there are people that fit into the former sentence and it works fine, but the Chapter 13 Trustees will be more involved with your case; possibly requiring monthly/quarterly reports. Even those with income which is primarily through incentives/commission may find it hard to navigate.

I'm not saying that it can't be done, it's just more... frustrating.

The up side is that if most of your debt is non-consumer (business and/or personal taxes), you may still qualify for a Chapter 7. If you really need the Chapter 13 to protect property, then you'll have no choice but to deal with the rigor of a self-employed debtor in a Chapter 13.

[LiveFree]

flashoflight is on the money, no pun intended. Chapter 13's work best if you are not self-employed, don't own any businesses, and have regular income. Now, there are people that fit into the former sentence and it works fine, but the Chapter 13 Trustees will be more involved with your case; possibly requiring monthly/quarterly reports. Even those with income which is primarily through incentives/commission may find it hard to navigate.

I'm not saying that it can't be done, it's just more... frustrating.

The up side is that if most of your debt is non-consumer (business and/or personal taxes), you may still qualify for a Chapter 7. If you really need the Chapter 13 to protect property, then you'll have no choice but to deal with the rigor of a self-employed debtor in a Chapter 13.

Thank you all for your responses. Justbroke, are you saying I may qualify for Chapter 7 prior to the 8 year waiting period that would be fulfilled next year? My income has been steady for 6 years prior to this pandemic. I suppose I need to talk to some attorneys as advised as well .

[justbroke]

Thank you all for your responses. Justbroke, are you saying I may qualify for Chapter 7 prior to the 8 year waiting period that would be fulfilled next year?

I was saying "you may still qualify" generically. All other requirements of filing and obtaining a discharge, under any Chapter of bankruptcy, would still apply. In your specific case, the 8 year from the filing of the last Chapter 7 case, in which you received a discharge, would apply.

[Ekop785]

Hello, and welcome.

I wouldn't bother with CH 13 at your income level. If it was me, I would ride out until I hit the 8 year mark, then file CH 7. I do not believe tax debt is dischargeable, but I am not an attorney. Your primary, paid off car could be an issue. I see AR only allows a $ 1200 vehicle exemption + a $ 200 "wild card" exemption (which you use towards any personal property you choose). Your "tools" are covered up to $ 750 (separate from the above exemptions). Look up your car using KBB "private sale" value, which is what most trustees use to determine value. I am sorry for your stress, I know these are some tough times.

[justbroke]

I do not believe tax debt is dischargeable, but I am not an attorney. Your primary, paid off car could be an issue.

Personal taxes are dischargeable under the 3/2/240 rule (unless there is a perfected tax lien against property and it doesn't impair an exemption).

Regarding exemptions, Arkansas debtor can choose between the Arkansas exemption scheme or the Federal Bankruptcy exemption scheme. We Floridians don't have that choice/luxury. With the Federal Exemptions, a person that doesn't have a homestead (or the homestead is less than the Federal homestead exemption), the debtor could use that (unused) homestead exemption up to about $12,275 (per debtor). That's on top of all the other generally generous Federal exemptions for other property; especially when compared to Florida measily exemptions.