Can I File Bankruptcy with a High Income?
It is a common myth that a high income may disqualify you from filing for bankruptcy. But the truth is there is no connection between the amount of your income and Chapter 7 or Chapter 13 bankruptcy; it mostly depends upon your financial situation.
Read this article to know how a high income impacts the entire process of filing for bankruptcy. If you are in this devastating situation and need legal help, contact an expert chapter 7 bankruptcy lawyer in Oklahoma immediately.
What Does the Bankruptcy Code Say?
According to the bankruptcy code, an individual who earns more than the median income has to take the means test to see if they are qualified for chapter 7 bankruptcy. If the means result says that they don’t have any income after all the bills are paid, they may be able to file for Chapter 7 bankruptcy. But when the means test shows that an individual may have some, however meagre, amount of money left after the bills are paid, they may be able to file for Chapter 13 bankruptcy.
What Is the Median Income Test?
This test averages your last six months’ income and multiplies it by 12 to calculate your annual gross income. After figuring out the amount, this test compares it to the allowed income limits for your state.
What Is the Means Test?
This test is more specific than the median income test, which allows you to deduct certain payments. In this test, you must deduct debt payments from the annual household income to see if anything is left in your account. You would be able to deduct fees for the following things such as,
Car loans
Mortgage
Mandatory costs include childcare and medical expenses.
What to Do in Case You Are Not Qualified for Chapter 7 or Chapter 13 Bankruptcy?
Chapter 11 is a part of the bankruptcy code available to individuals and businesses who do not qualify for Chapter 7 or 13. According to chapter 11, individual debtors can identify debts to restructure their finances and protect their assets. In most cases, an individual only very rarely files under chapter 11 since most of them qualify under Chapter 7 or Chapter 13.
An individual may be able to file chapter 11 bankruptcy if they owe excessive unsecured debt and don’t pass the means test for Chapter 7. They need to plan to make monthly payments to the bankruptcy trustee. After that, the trusty board will distribute your expenses to the creditors.
Know How to Win
High-income earners filing for chapter 7 bankruptcy must ensure that they file their case in good faith. You are not allowed to purchase luxury goods while failing to repay your unsecured creditors. To get out of this situation quickly, hire a chapter 7 bankruptcy lawyer. Consult with our experts at Reneau Law Group in Oklahoma.
**Disclaimer: The above article does not imply a relationship between attorney and client, nor does it aim to provide any legal advice.