For many Colorado residents, attaining a job with a higher paying income is considered a way to financial success. Many associate higher incomes with a lack of financial challenges, or at least the type of challenges that are faced by those with a low income.
Yet, even those with six figure incomes and higher can fall into financial peril when the circumstances are right. Experts warn that it is not a person's income that predicts their financial health, but the level of debt they carry. Accordingly, when individuals have a high amount of debt relative to their income, whatever amount of income that may be, it can lead the person searching for ways to eliminate debt because of the trouble it causes.
This is why bankruptcy is not just an option for those with lower incomes. No matter what a person's income is, bankruptcy can be an effective way toward debt relief, because it eliminates the root cause of a person's financial struggles - high debt.
Through bankruptcy, individuals can obtain a discharge of most of their debts, meaning they do not have to pay the debt any longer. At the same time, a person's creditors are prohibited from trying to collect any further on these discharged debts.
The timing for the debt discharge varies depending on the type of bankruptcy a person files under. While different types of bankruptcy involve different procedures and ways to discharge debt, the underlying goals - to allow the person to be debt-free and have a fresh start - are the same among the chapters. After the discharge, the individual can then restart his or her financial life, and apply their income toward what matters most to them, rather than constantly trying to pay down debt.
Source: Business Insider, "Why a 6-figure salary won't keep you from going bankrupt," Jenna Goudreau, Jan. 3, 2014