No one wants to file bankruptcy.
So many of my clients say: “I want to pay my creditors. I never wanted to file bankruptcy.”
I always tell them, no one does. None of us picks up our high school diploma and
turns around to say: “In ‘X’ years, I want to be sitting in a bankruptcy lawyer’s office.”
So, how do you figure out if you need to file bankruptcy?
Write down your monthly living expenses and income.
The income part may be hard, as “Unsteady Incomes Keep Millions Behind On Bills,” Patricia Cohen’s New York Times article states.
A more recent national survey by the Federal Reserve, based on 2013 data, suggests the problem has not only persisted as the economy recovers but may even have worsened. More than 30 percent of Americans reported spikes and dips in their incomes. Among that group, 42 percent cited an irregular work schedule; an additional 27 percent blamed a span of joblessness or seasonal work.
Usually, the bills come in about the same each month. Maybe heat higher in the winter, and so on for seasonal expenses.
But the rent/mortgage and the car payment stay the same.
Of course, in hindsight, it is best to keep bills to a minimum.
I was able to pay up front for a 3 year car lease, to avoid a monthly car payment.
I ain’t no financial genius; still working off my own credit cards.
But, if it is too late to change your car payment, and that budget you prepared shows monthly expenses that exceed your income, you may be a bankruptcy candidate.
Can you increase your income?
Budgeting is like dieting, two factors, calorie intake, calorie outgo, money in, money out.
If you cannot reduce the money out part, the only way to keep up is to increase income.
That is tough in this economy. Lots of folks already work multiple part time jobs.
Plan A should be paying cash for cars and big ticket items, so you do not have that monthly bill to face if your household income falls.
Plan B may be to file bankruptcy.