Often times, it’s easy to assume that bankruptcy is limited to those who earn less money and thus struggle financially. The truth is that bankruptcies can come from anywhere, regardless of median income. In fact, many high-income individuals face the challenge of the bankruptcy process for a variety of reasons.
Many individuals assume that if their income is relatively high that they cannot file for a Dallas bankruptcy. However, just like average earners, high-income individuals can qualify for both Chapter 7 and Chapter 13 in the bankruptcy process – it’s just more difficult to qualify.
Though it may seem counterintuitive, there are many reasons why healthy earners might need to file for a Dallas bankruptcy. For instance, during times of financial security, an individual or couple might become invested in financial obligations. However, something major like a job loss or medical emergency could bring an unexpected halt to income while those obligations still need to be paid.
While the laws have been curtailed to prevent system abuse by high earners in a Dallas bankruptcy, there are still options for high-income individuals struggling with their finances. For high-income debtors in the midst of the bankruptcy process, consider the following options and restrictions:
- Chapter 7. While it’s not impossible for high-income individuals to file under Chapter 7 during the bankruptcy process, it’s difficult because your average gross earnings prior to the filing must be below the comparative median in your state. However, because certain expenses are allowable, high earners with higher expenses could qualify. To determine whether you qualify for chapter 7, you will have to take a “means test.” Seeking the guidance of a bankruptcy lawyer during the process would also help.
- Chapter 13. If you fail the “means test” during the bankruptcy process, don’t worry! Reorganizing your debts under Chapter 13 is still another option for those seeking relief through a Dallas bankruptcy. However, there is a dangerous situation that can arise for high-income individuals: It’s possible to earn too much money to qualify for Chapter 7 but have too many bills for Chapter 13 to be a feasible option. Because this is a possible situation during the bankruptcy process, seeking the advice of a bankruptcy attorney could prevent any future dilemma.