Yes, It’s Possible! You Can File a Chapter 7 Bankruptcy While You Earn $1,000,000 Per Month


How can this be true?

It boils down to what types of debt you have.

In a bankruptcy proceeding, debts are considered either consumer debts or non-consumer debts.  If you can prove to the court that more than half of your debts are non-consumer debts, then the amount of money you earn doesn’t matter.

When Congress enacted the Bankruptcy Code, it wanted to make sure people who incurred mostly non-consumer debts were protected.  Their reasoning was to encourage people to take risks by starting new businesses and not to penalize them for their business debts.

This means:  If you have mostly non-consumer debt, the means-testing bankruptcy laws don’t apply.  The laws that compared your Schedule I income with your Schedule J income don’t apply either.  Your income doesn’t matter when you have mostly non-consumer debts.

Debts are broken down as follows:

Consumer Debts… are debts for personal, family and household purposes.  These include credit card debt, personal loans, home loans, personal car loans, legal fees for family matters, home utilities, personal insurance, and so on.

Non-Consumer Debts… are debts for business purposes.  These include debts where the motive is profit, such as business taxes, investment real estate debt, loans on business vehicles, business utilities and insurance, and so forth.

Not-So-Clear Debts… include obligations that could be consumer debts or non-consumer debts, based on your circumstances.  These include student loans, medical bills and credit card bills.

With the declining values in real estate – and with so many investors flipping houses – investors who are “under water” may be able to file bankruptcy and get rid of their white elephants, even if their incomes are very high!

Bankruptcy provides another benefit too:  After filing bankruptcy, not only do these investors have no further liability to creditors, they also have no further tax liability that could arise from forgiving debts outside of bankruptcy.

You’re Invited to Call or E-mail.

“If you have questions about loan modifications, foreclosure, credit card debt, bankruptcy,

tax liens or other financial problems, please send your e-mail today to or call 312-969-0730.” -- Rich

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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