Analyzing Your Budget to Determine If Bankruptcy Will Help
Insights from Our Skilled San Mateo Bankruptcy Attorney
As much as we would wish it to be, declaring bankruptcy is not a magic wand that will alleviate financial worries forever. Before filing for Chapter 7 or Chapter 13 bankruptcy, careful analysis of your budget can be prudent and highly valuable. Sometimes, declaring bankruptcy will do nothing to ease the debt crisis, and may even add to it! Individuals may want to consider alternatives to filing bankruptcy if they discover that a liquidation or reorganization of their assets will not resolve their underlying situation.
The Ins and Outs of Expense Analysis
Even after a successful bankruptcy discharge of debt, an individual or family will still have monthly living expenses. Adding to these basic budget necessities will be the debts that were considered to be nondischargeable through a declaration of bankruptcy. These can include tax debts, child support payments, and student loans.
In Chapter 13 bankruptcy, the courts will investigate to see if your disposable income, which is the amount left over after living expense and priority debt payments, will be enough to pay off your creditors through restructuring. The ins and outs of this analysis include determining your income-to-debt ratio and comparing it to the state's average. If your budget is deemed unable to withstand a declaration of bankruptcy, the petition will not be granted.
Improving Your Income-to-Debt Ratio
Boosting your income to debt ratio can only be done through decreasing your expenses, increasing your income, or both. Unless these measures are taken, the circumstances that led to your debt crisis may be doomed to repeat themselves. A reputable credit counseling service can instruct you on methods to live within your budget and save money. In fact, federal law mandates all petitioners for bankruptcy protection undergo an approved debt counseling program.
Options to improve the outlook of your budget can include:
- Limiting extravagant expenses such as luxury clothing, vacations, or automobiles
- Looking for cheaper housing
- Taking measures to cut energy costs, utility bills, and cable services
- Shopping at discount stores or supermarkets
- Obtaining a second job
- Applying for government assistance
Supportive Counsel for Financial Difficulties
A complete budget analysis can sometimes be a difficult, but necessary reality check into your finances and spending habits. At the Law Offices of Gary Brenner, we realize that tackling a debt crisis is rarely easy and we are dedicated to supporting our clients throughout the entire process. At your free case evaluation, our compassionate San Mateo bankruptcy lawyer can assist you in analyzing your budget to determine if bankruptcy would be right for you. As part of our commitment to help our clients regain a firm financial foundation, we offer a free credit repair program to all our bankruptcy clients.
Contact our firm today to schedule an appointment!