Many of our clients ask if they can work with a bankruptcy lawyer if they earn a lot of money. The answer is yes. We have helped many high-income earning clients to file for bankruptcy in order to resolve their debt situation. The type of bankruptcy that you can file is dependent upon several factors including how much money you make. If you think that you earn too much, it is that much more important to work with an attorney.
While you may earn a good living, you may not be considered a “high-income debtor” in the eyes of the court. Whether or not you are is dependent on several factors. The court will first look at where you live. This is important so that families living in D.C. are not compared with those living in Ohio, as the cost of living and how much people make are different throughout the country. Next, they will consider your family size. As your family grows it becomes more expensive to feed, clothe and care for them. This is understood within the bankruptcy court and it helps a lot of people to qualify for a Chapter 7 that otherwise wouldn’t.
In order to be a “high-income debtor” you must earn above the median income for your family size in your state. In California, if you make $77,896 and have a family of four you are at the median income level. For every member of your family, the amount that you can earn is increased. This changes every year so speak with a bankruptcy lawyer to get the updated figures. As long as you are at the median income level or below it, you can qualify for a Chapter 7 where all or most of your debts are eliminated. If you are above it, the next step is to take a means test.
A means test gives you the opportunity to provide more information about your income and your debts in an attempt to show why you should be allowed to file a Chapter 7. As a bankruptcy lawyer, we can also make the case for why you should be allowed to do so. If you are active duty military or National Guard, you are generally exempt from taking the test so let us know during your consultation if you are a service member. It may help you to file a Chapter 7.
If you do make too much money, you can still file bankruptcy but you have to file a Chapter 13 instead. A Chapter 13 can still eliminate some of your debts, but it does so by creating a settlement and payment plan. This way your creditors still get some money back, but the amount is reduced enough to be affordable. In this situation we can help you to create a proposed repayment plan that demonstrates what your true disposable income is after all of your expenses (including groceries and gas) in order to determine what you can apply monthly towards debts.
As a bankruptcy lawyer, we can help you to navigate through the process so call today for your consultation.
