Debt Relief for High Income Earners
Morris County Debt Settlement Lawyer on Qualifying for Bankruptcy and Other Debt Solutions
Anyone can find themselves dealing with more debt than they can handle. Even if you have a good job and earn a high income, your credit card debt or medical bills can pile up. You may then find yourself unable to manage them. Traditionally, bankruptcy offers a way for people struggling with debt to find relief. However, if you earn a high salary, you may want to try to avoid filing for bankruptcy protection.
Ast & Schmidt, P.C. is a bankruptcy and debt settlement law firm with more than 30 years of experience concentrating exclusively on helping people take control of their finances through bankruptcy, debt settlement and mortgage foreclosure alternatives. Our office is located in Morristown NJ, and we have helped people in Montville, Cedar Knolls, Dover and the surrounding areas when they needed experienced legal guidance for exploring all of their alternatives for resolution of their debt problems.
If you are a high income earner looking to take charge of your debts, our New Jersey debt settlement lawyer can help. We will answer your questions and explain your alternatives to take control of your finances.
Debt Settlement for High Income Earners
One option for people who have a high income is debt settlement. This involves negotiating with your creditors for a principal reduction and/or lower interest rates. A debt settlement lawyer in New Jersey can help by negotiating on your behalf and coming to an enforceable agreement with your creditors so that you can settle the debt for less than the total amount you owe. Often, creditors will accept a settlement of a delinquent credit card debt or personal loan for a lump sum payment of a discounted amount in exchange for forgiving the rest of the debt.
If you do not have the ability to settle for a discounted lump sum, the debt settlement may be based upon an affordable monthly payout over a number of years. This may reduce the amount due and eliminate or reduce the interest. Creditors frequently try to consider only your income and the debt owed to that creditor. In doing so, they do not consider your routine household expenses and payments for other debts.
Consequently, the creditor may believe that it can recover more money from a high income earner over time by making unreasonable settlement demands. Since creditors have no legal obligation to modify the terms of your account, they may refuse your debt settlement offer. This is where an experienced debt settlement attorney can help you.
Always consult a qualified debt settlement lawyer if you are considering any form of debt relief. Our Morristown debt settlement lawyers know the tactics to use when negotiating a settlement offer to creditors, what information to provide to the creditor, what information not to provide and what these creditors are looking for to make a deal.
You should also watch out for national companies that advertise themselves as debt settlement operations. Many of these companies are nothing more than debt settlement scams. If it looks too good to be true, it probably is!
Bankruptcy Options for High Income Earners
Finding debt relief through bankruptcy is possible for high income earners. However, the Means Test will have a significant impact on what type of bankruptcy you can file. If your debts are primarily consumer debts, then the Means Test applies. If your debts are primarily not consumer debts, then the Means Test does not apply. Non-consumer debts include:
- Business loans
- Mortgage loans
- Personal guarantees on investment property
If the Means Test applies, then you must undertake a detailed investigation and analysis of the qualifying Means Test expenses. This then determines what your surplus would be, i.e. projected disposable income. You do not base the Means Test solely upon the average of the prior six months of gross income, but it also includes the complex calculation of the qualifying Means Test expenses. Our New Jersey bankruptcy lawyers can perform these calculations to see if the Means Test creates a problem for filing for Chapter 7 relief. If you cannot file Chapter 7 because your disposable income under the Means Test is too high, you may be able to file Chapter 13 bankruptcy.
How Does Chapter 13 Work for Those with High Income?
In Chapter 13 bankruptcy, you present a repayment plan to the New Jersey bankruptcy court for approval. This plan outlines how you will pay your creditors and which creditors will be paid in full. Generally, you pay priority and secured debts arrears in full. Then, payment to your unsecured creditors (generally credit cards, medical debts and other type of debts) only receive payment on a small percentage of the debt.
The Plan sets the monthly payment to the Chapter 13 trustee. The Chapter 13 trustee makes distributions to creditors on your behalf in accordance with the plan. The unsecured creditors may receive only a small percentage of their claims over the lifetime of the plan. At the end of your repayment plan, any remaining unsecured debt is discharged. Consequently, the creditors will not be able to seek any further payment.
How Much Will a High Income Earner Pay Back During a Chapter 13 Bankruptcy?
The Chapter 13 trustee and Bankruptcy Court reviews financial information from:
- The Means Test
- A budget of current income and expenses
- The schedule of debts as to the amount of priority debt that must be paid in full through the plan
- An analysis of non-exempt assets
This analysis utilizes state income averages to compute allowances for some of your expenses. However, your actual expenses for certain categories may override the allowance.
Does Bankruptcy Stop Creditors?
Although these averages may not work in your favor because high income earners typically exceed the state’s median income limit, Chapter 13 may provide a way of stopping creditor pressures to help you establish a fixed payment over five years.
A Bankruptcy Court favorably views a Chapter 13 plan that provides for a 100 percent payment to unsecured creditors. Additionally, the plan will stop the creditors’ lawsuits, wage executions and levies on assets. It will, generally, stop the running of the high interest rates that the original credit card agreement may include.
Learn More About Debt Relief for High Income Earners from Our NJ Debt Settlement Lawyer
If you earn a high income, there are still ways you can gain control of unmanageable debts. A debt settlement lawyer from Ast & Schmidt, P.C. can explain the difference between debt settlement, bankruptcy and other possible debt relief alternatives that may be best.
We can go over your options with you free of charge, and advise you on how to get your finances back under control. Please contact us online or call (973) 984-1300 to set up a free initial consultation.