If a debtor decides to file Chapter 13 Bankruptcy, it is important that they create an accurate budget that accounts for all of the expenses and income. Chapter 13 bankruptcy requires the debtor to make monthly payments to the bankruptcy court every month for 3 to 5 years and if the debtor fails to follow the repayment plan the case could be dismissed.
Here's what a Chapter 13 bankruptcy debtor needs to do to prepare a preliminary budget:
- Account for and track all regular income (including alimony, child support etc.)
- Account for and track all expenses (including irregular expenses)
- Use old receipts, bank statements and/or checkbooks to see how much you spend on different expenses. Don't skip this part because it will affect the accuracy of the budget you create for your Chapter 13 bankruptcy.
- Figure out how much money you have left over after all the expenses are paid.
Once you put together your budget, you will have an idea of what you can afford in a Chapter 13 bankruptcy case. Of course it may not be what you will actually be required to pay once you file Chapter 13 bankruptcy; but it will be a starting point. Make sure you show the bankruptcy attorney the budget before you file and discuss you specific goals, such as saving your home and/or car using bankruptcy.