You're having a hard time paying your bills and wondering, is bankruptcy right for you? There is so much misinformation on the internet these days that you just don't know which way to turn.
You've even called one of these "mill" firms that advertise ridiculously low fees and all they want to do is have you make an appointment to meet them in person.
Your gut tells you they only want to "sell" you on filing a case and they refuse to answer your questions.
So, how do you know if bankruptcy is right for you? There are two approaches we take in dealing powerfully with your personal finances.
The direction you take depends upon your unique situation.
First, you need to know how much income you have.
It's important to also make sure that you're having the right amount of income taxes withheld from your paycheck so that you don't owe taxes, but you don't get a refund either.
This will maximize your household income and in bankruptcy, it becomes VERY important.
The reason is that if you receive a huge tax refund each year, the trustee will take that refund to pay your creditors, unless you protect it from an exemption under Chapter 7, or eliminate it under Chapter 13.
Next, we need to know how much you spend on household expenses.
Everything from groceries, cleaning supplies, dry cleaning bills, vehicle registration, it all comes into your monthly budget.
It's important to note your annual bills like the auto registration, property taxes, insurance bills, etc.
and divide them by 12 months and include a budget line item for them.
You should actually be saving that amount of money each month to pay for those bills in full when they arrive.
Do Not Include Your Credit Card Debt in the Budget! After you've calculated your income and expenses, do you have any money left over? If you have any money left over, we call this "disposable income.
" Disposable income is a good thing because it means that you have some money to pay your debts after your expenses.
If you take that number and multiply it by 60, which would equate to a 5-year repayment Plan, then you get an idea of how much money you would pay to your unsecured creditors over the life of a reorganization bankruptcy case.
After the completion of this type of case, the remainder of your debts will be permanently discharged.
On the other hand, if you have no money left over each month to pay your credit cards, then you may just qualify to file Chapter 7.
We call this the liquidation bankruptcy.
You can see how important it is to have a budget.
You have to know how much money you have, then you will know more about your options.
This information may provide some guidance for you.
Working with a bankruptcy attorney to help you prepare your case is extremely important to not only protect any assets you may have, but to guide you in preparing your case properly.
Don't risk losing your stuff, or giving away what little resources you have just to save a buck by going it alone.
Selecting the right attorney takes a Just little bit of effort on your part.
You can find a reputable attorney in your area by searching the National Association of Consumer Bankruptcy Attorneys website, or here in the Central District of California, there are more than 275 attorney members of the Central District Consumer Bankruptcy Attorney Association, or CDCBAA.
Use the resources you have to make well informed decisions that hopefully will have a positive impact on your financial future.
Take advantage of complimentary consultations that most attorneys offer and listen for whether they answer your questions and you would be comfortable having them represent you.
The attorney you hire can make all the difference in the outcome.
The decision to file is difficult and should not be made when you're experiencing financial threats such as wage garnishment, bank levy, or a foreclosure.
Planning ahead of these stressful events will save you time and money in the long run.
When you don't have enough money left over at the end of each month that would pay off all your credit card debts in three to five years or, if you have no money left over and need to borrow from friends, relatives or those pay advance stores, then you need to consider filing.