Debtors “Engaged in Business”?
The Bankruptcy Code requires more of debtors filing Chapter 7 who have been engaged in business, than it does of those whose income is from employment. If you are operating a business, such as a restaurant or shop, or have done so in the last 2 years, you must answer questions in addition to the normal ones for those who are employed.
Determine Whether You Have Kept Proper Records
1. Checking account Do you have all bank statements for the last 2 years? 2. Invoices Do you have invoices for all expenses 3. Cash Do you have a cash ledger for all cash income and payments? Did you deposit all cash in your bank account? 4. Taxes Have you filed all personal tax returns? Have you filed all business tax returns? 940? 941? federal and state
Based on Your Records, Determine Whether You Should File Bankruptcy or Not
If you have thrown out your records, or only have checking account records, or have not filed truthful tax returns, or are cheating on income tax, you may be better off staying out of Bankruptcy Court. The U.S. Trustee who examines your case will want to see your business records, and a copy of your bankruptcy goes to the IRS. In addition, you must disclose your income under penalty of perjury, so if you have been getting cash and not reporting it, you probably are better off not signing a bankruptcy petition without disclosing all income.