If you're one of the many people right now struggling with unmanageable debts and planning to seek bankruptcy protection to regain control of your life, now is the time to take a close and honest look at your finances -“ the money coming in, the money going out, what you own, and what you owe. This is useful for a number of reasons. First, it will force you to gather information you'll need to provide your attorney in connection with your filing. Second, it will force you to closely evaluate your spending habits. This, in turn, will help you prepare for a financially stable life during and after bankruptcy, because you'll inevitably end up crafting a more affordable budget for yourself.
To start with, take a sheet of paper and divide it into two columns. On one side, list and add up the money you have coming in the door on a monthly basis. This includes all of your incomes sources: your net pay from your job; child or spousal support payments; government assistance; etc. Note that you may need to prorate some of the income figures to make them fit into a monthly budget calculation.
Now that you've got a picture of what money you've got coming in each month, it's time to take a look at where it's going. On the other side of your sheet, list and add up all of your monthly expenses. You should consider not only your basic fixed expenses, such as housing, real estate taxes, utilities, gas, food, student loans, credit card payments, etc., but also your discretionary spending. Think about how you spend your money on daily or weekly basis. Do you buy lunch out? Is a fancy coffee from Starbucks part of your morning routine? These little things can add up fast.
Once you've assembled a basic balance sheet of your monthly income and expenses, make a similar accounting of the property you own versus the total debts you owe. This will help you get a clear picture of where you stand in relation to your debts. If you own a home, try to come up with a figure that you think best represents its current fair market value. \Do the same for your other property: furniture; jewelry; cars; appliances; equipment; computers; etc. Then list the total debts you owe: your mortgage; your car loan; credit card balances; etc.
Pay particular attention here to your level of credit card debt. If your payments on these accounts make up a large percentage of your monthly expenses and a large percentage of your total debts, bankruptcy is probably your best option indeed. Not only are these debts overwhelming your life, you're simply throwing money down the drain in a futile effort to keep up with the unaffordable payments.
Well, now you've gathered the basic information you need for your bankruptcy filing, and you've made an honest assessment of your financial situation. You're well on your way to paving the road for financial success in the future. Call your bankruptcy attorney and put your plans into action!