If you have a job where part (or all) of your income is based on commissions, or you are self-employed in a sole proprietorship (as opposed to a corporation or LLC), and are considering bankruptcy, then you need to tread carefully. Your commission or other business receivables might be at risk of seizure by a bankruptcy trustee. The reason for this hinges on whether you are considered an employee or an independent contractor.
Do you work on commission, get a paycheck with tax deductions and a W-2 at the end of the year, or do you get commission checks and a 1099? If it is the latter, when you file bankruptcy can be very important, and delaying it can cost you money. This is because moneys due and payable to an independent contractor (or a sole proprietorship) can be considered a receivable to a business, not a paycheck, and as such an asset. Learn more here.
