08 Feb Budgeting is Critical in a Chapter 13 Bankruptcy Case
Budgeting your money is critical in a chapter 13 bankruptcy case because you will have to make a payment to the chapter 13 trustee every month. If you do not make this payment, your case may be dismissed and you will not gain any benefit from your bankruptcy filing.
Therefore, it is very important that you know how much money you have coming in to your household and how much you have going out so that you can make this payment and meet your other obligations.
As part of your chapter 13 bankruptcy case preparation, you are required to go through financial counseling. You must also provide a lot of information about your income and your expenses to your lawyer. These are good starting points but most people seem to underestimate their expenses or do not take into account non-recurring expenses that are important and can be budget busters.
In preparing your budget, you should have your checkbook handy or bank statement so that you can see exactly where you are spending your money. Write down each expense on a sheet of paper. Look back through your checkbook or other papers to make sure that you catch all of the non-recurring expenses like tires for your car, oil changes, property taxes and birthday and Christmas presents.
You want to set aside enough money each month so that you have money when those things are needed. You should also be aware of small expenditures such as convenience stores, lunch money and the like. After you write down all of your expenses, you start deducting your expenses from the money that you have available each month. If it looks like you will not have enough money to pay your expenses, then you will have to figure out some cuts so that you are not running a deficit or figure some way to increase your net income.
You had some goals in mind when you first met with your bankruptcy lawyer. Perhaps you wanted to save your home from foreclosure or keep your car from the repo man.
Filing a chapter 13 bankruptcy case is only the beginning. You don’t want to miss the benefits of a successful chapter 13 case through poor budgeting and dismissal of your case.
Adrian Lapas, Esq.
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