Careers in America have changed rapidly in the last decades, and there are more opportunities for entrepreneurs and freelancers than ever before. The gig economy has freed millions of people from the restraints of traditional corporate employment, allowing them the freedom to choose their own workload and hours. Gig workers are independent, on-call contractors who enter into formal agreements with on-demand companies to provide services to the company’s clientele. Some better-known “gig opportunities” include Lyft and Uber but may also include food and package delivery drivers. A gig worker enjoys many benefits, but they may also be more susceptible to cash-flow issues than a salaried employee.

The bankruptcy process was created to provide a fresh start for people experiencing an unanticipated financial crisis. Covid-19 presented an interesting dilemma for gig workers – while some (such as grocery delivery personnel) flourished, others floundered. Drivers providing shared-ride services, for instance, saw their business grind to a halt. The pandemic perfectly illustrates how external circumstances can derail a steady and hard-earned gig business. Is bankruptcy an option for those gig workers who saw their income disappear and subsequently fell behind on their bills?

Financial Solutions for the Gig Worker

Chapter 7 Bankruptcy: This type of personal bankruptcy is the most popular as it is quick but comprehensive. If a gig worker has amassed too much debt and cannot pay it off, Chapter 7 bankruptcy provides the opportunity to eliminate general unsecured debts. Since most cases only take about four months to resolve, Chapter 7 could represent a fresh start for those in the gig economy, allowing them to begin building their business again. Gig workers are as successful as their efforts allow, and their financial situation could turn around rather quickly with this type of help.

Chapter 13 Bankruptcy: Similar to a traditional self-employed individual, there may be circumstances when Chapter 7 is not the best financial solution for gig workers. Some individuals have asset equity, while others may have returned to an income level higher than the median. In these situations, Chapter 13 bankruptcy may be an ideal solution. Gig workers are eligible to file for Chapter 13, even without a traditional employer or a constant source of income (such as a salary.) This type of bankruptcy may be the most appropriate avenue for debt relief in the following situations:

  • The individual can catch up on mortgage payments in less than five years.
  • The individual earns too much money to qualify for Chapter 7.
  • The individual has substantial tax debt.
  • The individual has significant equity in their car or house.
  • A vehicle subject to repossession is used for the business.

Chapter 13 offers those in the gig economy a robust solution for complex financial challenges. As the American economy continues to evolve and change to reflect a new reality, Chapter 13 is likely to remain a viable solution in the coming year.

Sarasota Attorneys and Bankruptcy

The gig economy is a new employment category in Florida, only becoming popular in the last decade. As is the case with many new opportunities, financial uncertainty is likely to be a part of the equation.

If your career as a gig worker has suffered a setback for any reason, help is available. The bankruptcy attorneys working with Richard V. Ellis offer expertise to people in all types of careers, including yours. If you live in the Sarasota area and need advice regarding the potential of bankruptcy, call us today.