As a high-income earner, you might be reluctant to declare Chapter 11 bankruptcy; after all, it might seem reasonable to suppose that you’ll make enough money to pay off your debts. But that belief can often belie the fact that no matter how much income or assets you have coming in, if your liabilities are sucking up your money – and then some – then it might be time to wave the white flag and declare personal bankruptcy.
Chapter 11 bankruptcy is designed for businesses and high-income earners who have too much debt to qualify for Chapter 7 and Chapter 13 bankruptcies. Filing for a Chapter 11 bankruptcy allows the bankruptcy courts to set up a U.S. trustee who will work with your creditors to establish an ongoing payment plan.
Now that you know more about declaring a Chapter 11 bankruptcy, how do you know when it’s time to file for one?
You Can’t Pay Your Bills. This is an obvious one; however, you’d be amazed at the number of individuals who are too proud to file for a Chapter 11 bankruptcy, despite drowning under a mountain of bills and personal debt. If you can’t pay your bills or you continually have to decide between paying your bills or buying necessities for your home, then it’s time to work with a bankruptcy lawyer who can help you wipe the proverbial financial slate clean.
You Can’t Get A Consolidation. If you owe too much money to your creditors, you might be tempted to apply for a debt consolidation loan. However, take note: it’s often difficult to get a debt consolidation loan if you have an extremely large amount of debt in addition to a poor credit score. If you can’t get a debt consolidation loan or you’ve been denied one, it’s time to look into filing for a Chapter 11 bankruptcy.
Liquidating Your Assets Won’t Help. For some high-income earners who are struggling with serious amounts of debt, even liquidating their assets won’t help chip away at the mountain of bills they’re up against. If you’ve already determined that selling your assets won’t help with your bills, then it’s time to get in touch with a bankruptcy lawyer – and fast.
Your Credit Is Shot. Many individuals refuse to file for Chapter 11 bankruptcy simply because they’re afraid of having this “black mark” on their credit scores. But if you’ve been struggling to pay your bills, have a mountain of debt and often find yourself in collections, then let’s face it: your credit is already rock-bottom. At this point, declaring a Chapter 11 bankruptcy will finally give you the fresh start you need to rebuild your credit score.
Contact a bankruptcy attorney today if you think it’s time to file for a Chapter 11 bankruptcy.