Is High-Income Bankruptcy an Option for Me?

When you are a high-income earner, you are likely also a high-profile member of your community. That can make life stressful, especially when your high-level income is not creating the financial balance for your family that it once was. In this instance, you may be wondering what your options are since bankruptcy typically requires a means test – and you do not want your friends and neighbors to know that you are thinking of filing for bankruptcy, anyway. 

Do you have any options? Can you file for bankruptcy? Are there ways to protect your reputation and safeguard your security in the process? At the Van Horn Law Group, we have the answers you need! 

Do High-Income Earners Have Options for Bankruptcy?

You may have heard that people who file for bankruptcy must meet specific qualifications. Typically referred to as a means test, these specifications may entail accounting for their income. In some instances, a remarkably high income will knock a person out of qualifying for certain types of bankruptcy. 

However, this is not always the case.  The bankruptcy means test is designed to ensure that people who make more than enough to repay their debts are not using bankruptcy to avoid doing so. However, if your debts are greater than the amount you are bringing in, you may still qualify for bankruptcy. In this case, you would likely go through a process known as a high-income bankruptcy. 

What is High-Income Bankruptcy?

Few things are more frustrating than facing bankruptcy as a high-income earner. You make great money – you should be able to enjoy that money while paying your bills! Unfortunately, life does not always work that way. There are many reasons why a person may fall into debt, and many of them are either unavoidable or challenging to navigate without expert legal and financial guidance. 

Regardless of why you are facing a bankruptcy, doing so with a high-level income can be confusing. The most important thing you can do is not to listen to people who are not bankruptcy attorneys. These people may give you inaccurate advice, most of which will only hurt your already tricky scenario. 

Sometimes, even inexperienced lawyers may tell you that you are ineligible for bankruptcy. Just because a person deals with bankruptcy regularly does not mean that they understand the intricacies of high-income bankruptcy. These scenarios can be entirely different than the typical bankruptcy case, so it is imperative to your success that you work with an experienced legal team who knows about these unique challenges and how to address them. 

High-income bankruptcy is primarily different because those who file for it are not subject to the same means test as regular bankruptcy filers. They have different types of debt, which requires a different kind of solution. That is why so many people mistakenly believe that they are not eligible for bankruptcy with a high income – something that simply is not true.

Consumer and Non-Consumer Debt

How are high-income filers different than the typical bankruptcy filer? In most cases, they have a different type of debt. The typical bankruptcy client has mostly consumer debt. That is debt that is incurred in the consumption – or use – of things. It’s also referred to as personal consumer debt since this debt is incurred by purchasing consumable goods for the person themselves or members of their family or household. 

People with high levels of income often have something called non-consumer debt. This debt is incurred because of business expenditure. This may include numerous expenses, including but not limited to: 

• Investment real estate costs.
• Vehicle loans for vehicle used for business.
• Business insurance and lines of credit used for business expenses.
• Utilities and other everyday expenses incurred while running a business.

There are many other ways to incur non-consumer debt. Still, those specifics are not as important as this: non-consumer debt holders are not typically subject to the same bankruptcy means test that regular bankruptcy candidates are. This allows them to make a lot more money without being penalized for it the way that the average bankruptcy filer would be.

A knowledgeable lawyer who understands high-income bankruptcy will begin by establishing the types of debt you have. They will work with you to labile whatever debts that might qualify as non-consumer debts so that your debts will be less likely to count against you during the bankruptcy process. 

Make sure that you are honest and upfront with your legal team from the very beginning of the bankruptcy process. Why? Because all the details of your finances will be exposed during a bankruptcy. If you hide anything from your legal team in the process, they cannot prepare you – or protect you – from the consequences of it.

How Can I Be Sure that My Privacy – and Profile – Will Be Protected?

Now you know that bankruptcy may be an option for your unique scenario, how can you be sure that your privacy and dignity will be spared in the process? People with high incomes often list this as a top concern, and with good reason. You have a lot more to lose than the average person!

Thankfully, an experienced bankruptcy lawyer will know that and be prepared to help you protect that privacy. Discretion is critical, and a seasoned attorney will know how to help you navigate the process of a successful bankruptcy without violating that. Additionally, they will have the kind of knowledge that you need to help you kickstart the process of rebuilding your credit and improving the outlook of your financial future!

If you are still curious about the ins and outs of high-income bankruptcy, give us a call at (954) 765-3166. At the Van Horn Law Group, we are a team of experienced, understanding legal professionals who have worked with clients from all walks of life. Whether you are an entertainer, a politician, a business mogul, or anyone else, your privacy is a top priority for us. Let us guide you through the process of filing for bankruptcy and get you the fastest and best possible outcome.