It is possible for a debtor to file for a Chapter 7 bankruptcy despite an annual income of a million dollars, but they will have to pass all sorts of criteria mentioned in the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), passed by Congress in 2005. The most common eligibility is to pass the Means Test.
Under 11 USC § 707(b), the Means Test requires a debtor to prove that their gross income is less than the average income meant for their family size in their state. Most people ignore the first part of this paragraph and focus only on family size and income. However, you can bypass your means test altogether by proving that you owe non-consumer or business-related debts despite having a gross income far more than the median income (stated by IRS).
Congress had incorporated this loophole in order to encourage businesses. Stories of failure of small businesses in their first year are not uncommon. Thus, Congress decided to allow the filing of Chapter 7 for business debtors, instead of the costly and time taking Chapter 13, so that people are not scared of taking risks and opening businesses. However, whether it is beneficial for the economy or not is debatable.
To get expert advice on bankruptcy-related problems, contact the Recovery Law Group at www.recoverylawgroup.com or call on 888-297-6203.