How Does Bankruptcy Affect Co-Signers?
If you run your own small business, participate in the gig economy, or work as a freelancer, it is natural to have bouts of financial instability. But if this uncertainty becomes too much and you are unsure how you could ever pay off your debts, you may accept that you have lost to this financial risk and declare bankruptcy. Well, for this, please read on to discover whether you are eligible to file for bankruptcy as a self-employed individual, and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C., can help better explain how this process works in unique cases like yours.
As a self-employed individual, am I eligible to file for bankruptcy?
You can let out a sigh of relief knowing that you are eligible to file for New York State bankruptcy as a self-employed individual. This is because the United States Bankruptcy Code primarily concerns itself with a debtor’s overall financial situation (i.e., income, assets, and debts), rather than with whether a debtor has a traditional employer.
How do I prove my income in bankruptcy if I’m self-employed?
The only thing different with bankruptcy as a self-employed individual is that your income likely fluctuates from month to month. This means that proving your eligibility may be more complex than it would be for a salaried individual. Particularly, this is in reference to the Chapter 7 means test, where you must fall under the state’s median income to qualify.
For reference, as an individual, the median income limit for New York State as of April 1, 2026, is $73,272. If you are part of a household of two, three, four, or five, this increases to $92,902, $115,579, $139,040, or $150,140, respectively. Then, for any additional members, you would add $11,100 to this total.
Rest assured, our team will help prove your income and find ways to make you a candidate for Chapter 7 bankruptcy, should this be the legal case you prefer. Here, you will have to do the frontload of work and collect your tax returns, profit-and-loss statements, bank statements, invoices, and any other relevant income and expense records.
One strategy we may adopt to put you right under the Chapter 7 median income limit is to deduct ordinary and necessary business expenses from your income. However, you must be honest with us about what is actually “ordinary” and “necessary” given your specific business or independent work. In a worst-case scenario, you could be accused of bankruptcy fraud.
Just because you are used to relying on yourself as a self-employed individual does not necessarily mean that you have to go through the bankruptcy process alone. Rather, it would greatly benefit you if you turned to a competent Rockland County bankruptcy attorney for legal assistance. Employ the services of The Law Offices of Allen A. Kolber, Esq., P.C., today.
