High Income Debtors and Bankruptcy

In these tough financial times, finding people with a steady job, much less a job that provides a higher income, can be difficult. As a result, it may be surprising to find a lot of these high-income debtors are currently considering bankruptcy. But in this economic downturn, many of these men and women are suffering from unexpected challenges to their steady income and business, and, as a result, joining millions of other Americans by seeking the safe harbors of bankruptcy to protect what they’ve worked for.

If you happen to be one of these high-income debtors, you may be wondering what bankruptcy can offer and if you’re even eligible. Well, take heart, high incomers, there’s a bankruptcy solution for you, compliments of the Bankruptcy Code.

The Bankruptcy Code seeks to encourage higher-end entrepreneurs to take risks in their business dealings.  To do so, the Code was written in a way that allows individuals with mostly non-consumer debts accumulated during the course of business to be able to discharge their debt in Chapter 7 bankruptcy. In this way, high income individual can receive the same bankruptcy relief as individual debtors seeking a personal bankruptcy to dispense with their consumer debts without fears that they would not pass the "Means test."

Bankruptcy’s “Means Test” is a formula for determining your ability to pay back your debts. Your inability to pass this test limits your bankruptcy options from both Chapter 7 and Chapter 13, to simply being able to file under a Chapter 13 plan. As a result, while a traditional Chapter 7 personal bankruptcy liquidation may not be available for some high-income debtors, the Code has made allowances so that these same debtors can, in turn, qualify to liquidate their debts if the majority of these debts are non-consumer debts.

The next logical question then is what is non-consumer debt? A couple of examples include:

Credit Card Debts Stemming from Business Purchases
Did you use a credit card to purchase computers, printers or other office supplies for your business? Use plastic for business repairs or additions?  If you’re a high-income debtor and have credit card debt incurred to buy equipment and supplies for your business, you may be able to discharge those debts in Chapter 7 bankruptcy.  Conversely, due to “means test” problems, high income debtors may not qualify to discharge debts from credit card purchases of personal computers, furniture or to remodel their home.

Loans Related to Business Expenses or Inventory
High-income debtors can also discharge debts like personal loans if they are used to purchase inventory for a business or provide for other related expenses.  As before, the means test would prohibit discharge of similar personal loans if they were used to help with a home mortgage or other personal costs.

Don’t wait for your own entrepreneurial bubble to burst. Join the millions of American who have found immediate help to keep their lives on track while retaining their hard-earned cash. If you are a high income debtor who has been affected by the economic crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-833-627-0115, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.