People often believe that if they only made more money, they wouldn’t have to worry about credit card debt. However, a recent story in the Wall Street Journal proved that this is not necessarily true. The story featured a website content controller who was making $200,000 a year and, even after declaring bankruptcy in 2005, still found herself $300,000 in debt.
Simply put, this woman was living outside of her means, even though her means were far greater than most Americans. But when people earn more, they tend to seek more comfortable living. They become complacent with their new lifestyles and costs naturally go up. With every increase in pay comes an increase in spending, and far too often expense exceed income.
While filing for bankruptcy helped the controller cancel her $500,000 debts, a person usually can only file for bankruptcy once in 8 years. While the specifics may differ for Chapter 7 and Chapter 13 bankruptcy, it is safe to assume that once you file for bankruptcy once, you won’t be able to file again anytime soon.
This means that it is just as important for high-income families and individuals to create budgets and not borrow more than they earn. Credit debt can happen to anybody, no matter his or her socioeconomic status or income. If you find yourself in so much debt that you are unable to pay it all back, consider bankruptcy. In some cases it may be the only option, and a bankruptcy lawyer can help you to decide whether or not you should take that recourse.