Can I File for Personal Bankruptcy If I Am a High Earner?
Are you in a situation where you are struggling to repay the debt you owe, yet you are a relatively high earner? Many people who earn relatively high, or even significantly high, salaries struggle with debt. Indeed, according to a recent CNBC report, high earners “often feel stuck financially due to rising costs, debt, and lifestyle inflation.” Many rely on credit cards, and that reliance often results in revolving balances that rise each month with interest and penalties in the event of late payments. According to the Pew Research Center, about 19 percent of American households are considered “upper-income,” but there is no specific salary that places a family in this class (though most have annual incomes of about $170,000 or more). Whether you are a low-income, middle-income, or high-income household depends on your geographic location, the number of people in your household, and other factors.
Assuming you are in an upper-income household, or even in a higher middle-income household. Can you file for bankruptcy? The answer is likely yes, and our South Florida bankruptcy lawyers can explain.
Reorganization Bankruptcy is More Common Than You Might Think Among Higher Earners
Reorganization bankruptcies are actually much more common than you might think among higher earners. Even if you earn a relatively high annual salary, you may have more debt than you can repay, and you may be struggling with monthly payments. With a reorganization bankruptcy, you can restructure debt and repay creditors over time. Depending on your specific circumstances, you may be eligible to have certain debts discharged at the end of your bankruptcy case.
Most high earners will file for Chapter 13 bankruptcy, but in some situations, it may be necessary for an individual to file for Chapter 11 instead due to debt limits and eligibility.
Pay Attention to Debt Thresholds for Eligibility
What are debt limits for purposes of reorganization bankruptcy eligibility? In general, an individual — including a high earner — who wants to reorganize debt will want to file for Chapter 13 bankruptcy if they are eligible. This is a type of consumer bankruptcy that is generally less complex than a Chapter 11 case, which has a somewhat similar process. Both allow a debtor to restructure debts, but Chapter 13 has a debt threshold. This is particularly important for higher earners, since they are often among the individuals with personal debt that may exceed the debt ceiling.
Currently, the Chapter 13 debt limits are $526,700 for unsecured debt and $1,580,125 for secured debt. These threshold amounts will remain in place through March 31, 2028. If you have too much debt to qualify for Chapter 13 bankruptcy, you can file for Chapter 11 as an individual instead (there are no debt limits for Chapter 11 bankruptcy).
Contact Our West Palm Beach Bankruptcy Lawyers for Assistance with Your Consumer Bankruptcy Case
Financial difficulties can impact Florida residents and business owners across the socioeconomic spectrum. While many lower wage earners consider bankruptcy when they are struggling with debt, filing for bankruptcy — reorganization bankruptcy in particular — is also something that middle-income and high-wage earners do. As we discussed above, even if you earn a substantial income, you may have reasons to file for bankruptcy and you may be eligible to do so. To find out more about filing a bankruptcy petition, you should get in touch with one of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan Delaney & Eller, PLLC. Contact our firm to learn more about how we can assist you.
Sources:
law.cornell.edu/uscode/text/11
pewresearch.org/short-reads/2024/09/16/are-you-in-the-american-middle-class/
