A self-employed person is an independent worker, who works for himself/herself instead of an employer, drawing earnings from a trade or business that they manage. Self-employed persons can select from different forms of bankruptcy, including chapters 7, 11 and 13. Declaring bankruptcy does not change the self employed status of a person. As such a self employed person can continue to work as normal.
Self employed persons own certain assets such as tools of trade which are needed to keep working. In bankruptcy, self employed persons may maintain necessary assets and tools to sustain regular income. Such assets and tools include:
- personal possessions;
- tools of trade; and
- work vehicles.
In bankruptcy, self employed persons are permitted to keep reasonable household items. This includes washing machine, TV stereo, fridge freezer, and personal computer. On top of this, self employed persons are allowed to keep any tools which are required to do their job. For example, if you are a plumber you will be able to keep your plumbing equipment. If you are a musician, you will be able to keep instruments or equipment you need to earn your living. A bankruptcy court ensures that a bankrupt person earn a living and pay for household expenses. A bankrupt person can keep a vehicle as long as its value is less than the officially permitted limit. However, if a self employed person’s vehicle forms part of the tools of trade, for example a work van, then s/he will normally be able to keep the vehicle even if it is valued at more than the officially permitted limit.