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Stacy B Miller On 26th Sep,17
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Filing bankruptcy - Why planning at the right time is crucial?

Don’t have enough money to pay off your credit cards? Lost job or looking for a job? Unable to cover your household expenses?

Dude, you’re in a big financial trouble.

Let’s us talk about your options right now.

  1. You can opt for debt settlement provided you have a regular source of income
  2. You can opt for debt consolidation program to pay off credit cards. Again, you need to make an affordable monthly payments for 2-4 years.
  3. You can file Chapter 7 bankruptcy to get rid of credit card debts within 3-4 months.

Perhaps the last option is the easiest one since bankruptcy filing can help you avoid foreclosure and lawsuits. It helps to modify payments and reduce debt obligations of the person filing bankruptcy. Chapter 7 bankruptcy gives a fresh financial start to debtors by liquidating assets. Chapter 13 bankruptcy, on the other hand, helps you get out of debt between 3 and 5 years.

Why planning is important when you file bankruptcy?

It will be impossible to have financial stability after filing bankruptcy if you don’t have proper planning. Household expenses will be there even after filing Chapter 7 or 13 bankruptcy. If you don’t change your spending habits, then it will be tough to regain financial stability.

Create a balanced budget before filing bankruptcy. Calculate all the figures and see if you can cover all your bills every month after filing bankruptcy. Build an emergency fund so that you don’t have to depend on credit cards when things go wrong. Life is full of shocks and surprises. An emergency fund can help you deal with both pleasant and unpleasant surprises deftly. Most importantly, you won’t incur new debts and need further debt help.

Plan your budget carefully before filing bankruptcy. There is a valid reason behind it. Your bankruptcy attorney will propose a budget plan to the court. But that is different from the one you have created. Your budget is based on your household’s monthly income and expenses. It reflects actual household expenses. Your attorney’s budget shows the monthly expenses of the average household of your size.

Which one should you choose?

Both the budget plans are correct but they have different purposes. Unless both you and your attorney collaborate and create a budget plan based on your monthly spending habits, it’s better to choose the budget you have created. Your bankruptcy attorney’s budget won’t show the actual figures. Without actual figures, it will be tough to know if you’re ready for a fresh financial start after filing for bankruptcy.

What if you can’t create a balanced budget?

There are lots of options. If your income is not enough to cover all your debts, then look at the areas to reduce your expenses. If this doesn’t solve the problem, then you need to increase your monthly cash flow. You can do an extra job, sell your useless assets, or downsize your home. It’s important to be careful about how you spend your money if you wish to stay out of financial trouble down the road.

Some ideas may work and some may not work. You need to think about the ways to modify your budget. Think about the ways to bring positive results.

What do you have to plan before filing bankruptcy?

You have to plan and take constructive steps before and after filing for bankruptcy. To sum it up:

  1. Explore all the debt reduction services
  2. Check if any of the debt reduction services will suit you
  3. File bankruptcy if none of the debt reduction services can help you
  4. Create a balanced budget and follow it
  5. Lower your expenses where you can
  6. Figure out if you need more income
  7. Build an emergency fund
  8. Decide when and how to pay bankruptcy attorney fees

I would like to elaborate point no 8 little bit. You have to pay a flat fee to the bankruptcy attorney before opening the Chapter 7 bankruptcy case. But in case of Chapter 13 bankruptcy, you can make a down payment before filing the case, and pay rest of the fee later.

Timing is everything……

There are times when it is best to file bankruptcy immediately. Again, there are times when it’s better to postpone your plan for filing bankruptcy.

A delay in the bankruptcy filing is good in the following situations:

  • Creditors have filed a lawsuit against you.
  • Lenders are threatening to repossess your vehicle.
  • Creditors are threatening to garnish your wages.
  • Your credit is in a bad condition.
  • Lenders are threatening to foreclose your property.

A delay in the bankruptcy filing is not good in the following situations:

  1. You can pay off credit card debt with debt settlement or debt consolidation
  2. You have filed Chapter 7 bankruptcy 7 years back
  3. You have filed Chapter 13 bankruptcy 3 years back
  4. You have more money in the bank account than what you’re allowed to keep

Have you decided to file personal bankruptcy? Or, do you want to get debt relief without filing for bankruptcy? Call (800)-530-OVLG and your financial coach will give you all the debt relief options. He will help you to choose the best amongst all the available debt relief programs. You’ll also get free debt counseling over the phone. It’s confidential and effective.

Last Updated on: Tue, 26 Sep 2017

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