How do I report my self-employed business income in bankrutpcy?

In bankruptcy we normally use your paystubs to calculate a 6 month average of your income.  This average then shows whether you can qualify for a chapter 7 or a chapter 13.  When I’m dealing with a self-employed person, it gets more difficult.

The chapter 13 trustee uses a fairly simple profit and loss statement which we can fill out and then use to calculate income.  This is not a complicated form by any stretch of the imagination.  I have attached a copy of it here:  Profit Loss Statement blank.

I then use this form to run the six month average, which then helps me compare your income and expenses to the median income, and then we can figure out whether you’re a chapter 13 or a chapter 7.

You can hire an accountant to get it done the right way, but for most self-employed businesses, that really isn’t necessary.  This is bankruptcy, and anything you can do to cut down on expenses is definitely going to help.

Now when we meet with the bankruptcy trustee at the 341 meeting of creditors, he will ask for your most recent paystub:  you won’t have one.  Then we give him a profit loss statement, with your handwritten figures, and this is good enough.

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