As expected, the number of bankruptcy filings is in certain aspects directly correlated with the state of the economy. A decline in the economy, will lead to a higher number of people filing bankruptcy. Over the past year a troubling new trend has emerged which deserves some attention. The past year has indicated that people earning six-figure incomes are filing bankruptcy petitions at an alarming rate.
Prior to the recession, professionals and high-income earners found a way out of their debt problems. The recent decline in the economy, an increase in mortgage payments, and an increase in the cost of living has prevented these same individuals from finding their own way out. The amount of unsecured debt these individuals carry has increased. In years past these individuals counted on year end bonuses and other additional sources of income to bail them out. The truth is that regardless of how much you earn, if your expenses exceed your income bankruptcy may be for you. A common misconception of bankruptcy is that only people with limited income file bankruptcy. This is not the case. Many professionals making well over six-figure incomes are turning to bankruptcy to obtain a fresh start. Bankruptcy is no longer just a tool for the poor, but is now also a tool used by the middle to upper class as well. With the economy showing little signs of improvement, the number of high earning debtors will continue to rise unless they can cut expenses.