Guiding You Toward A Brighter Financial Future

Declaring Chapter 7 bankruptcy if you work for yourself

On Behalf of | Oct 9, 2023 | Bankruptcy Exemptions

People sometimes find themselves in a conundrum when considering bankruptcy. They know that they can’t afford to make all of the payments on their debt-related obligations, so they are interested in using Chapter 7 bankruptcy to eliminate some of their financial strain. They see this opportunity as a fresh financial start, getting things back in order so that they can create a more positive future for themselves. Bankruptcy isn’t just about eliminating past financial mistakes, but about building a solid financial foundation upon which to manage future challenges.

However, many people interested in filing for Chapter 7 bankruptcy also worry that they’re going to lose many of their valuable assets. These could include assets that they need to make a living. Perhaps the person works as a carpenter or a contractor, and they have numerous power tools. Perhaps they work as an accountant and so they have computers, tablets and other electronic devices. Regardless of the specific job that they perform, they may be worried that Chapter 7’s nickname “liquidation bankruptcy” may render them unable to provide for themselves and their family moving forward.

Using bankruptcy exemptions

This may be a common fear, but it is also not well founded for most filers. There are many different bankruptcy exemptions, and the vast majority of people lose none of the assets that they own when they file for Chapter 7 bankruptcy relief. They erase their debt without having to give anything up. One exemption is for the tools of the trade that allow a self-employed person to keep earning income. Under Tennessee law, people can declare “implements, books and tools of trade [worth up] to $1,900.”

The point of bankruptcy law isn’t to render someone destitute or to remove their ability to earn in the future. If that was what happened, no one would ever declare bankruptcy because it wouldn’t be beneficial. The laws have been set up specifically to create the fresh start that people sometimes need, and knowing how to utilize exemptions can help filers to achieve that goal.

Are you considering bankruptcy?

It’s very important to understand exactly how the bankruptcy process works, what steps to take and what the ramifications of the process are actually going to be before committing to a plan of action (or inaction). Never assume that the specific details that apply to anyone else’s case will also apply to yours. Each case is unique, so seeking personalized legal guidance accordingly is usually a very good idea.