Filing bankruptcy will force you to take a cold, hard look at your budget, past financial decisions and assumptions about future income and expenses. When I meet with my bankruptcy clients I always say two things:
- I am not here to judge you – our goal is to solve your debt problems in the most painless way possible; and
- because you have ended up in a bankruptcy lawyer’s office, everything needs to be on the table. We need to use this bankruptcy to change your path.
As difficult as it may have been to call my office to schedule an appointment, you may discover that filing bankruptcy can result in important long term benefits.
For example, the bankruptcy paperwork we complete requires us to create a cash flow neutral budget. In the case of Chapter 7, we need to show little or no disposable income, and in Chapter 13 we need to show enough disposable income to fund your Chapter 13 plan, but no more.
Your bankruptcy trustee will look closely at the budget we file and will object to allocations for luxury or non-essential items. Your trustee will not object to expenditures for reasonable and necessary expenses.
Smarter Budget Decisions
Recently, for example, I represented a husband and wife who were struggling with negative cash flow (expenses higher than income) and who made the decision to surrender a leased vehicle they could not afford. Giving up the leased vehicle resulted in a savings of $650 per month but now they had “extra” money available.
Prior to filing bankruptcy, they made the decision to buy disability insurance and term life insurance – neither of which they had before. These purchases eliminated the disposable income issue for our bankruptcy filing, but more importantly, these purchases were sound financial decisions that will protect my clients and their family in the future.
Improved Family Dynamics
In another recent case, I represented a man who had been afraid to tell his wife and children that his income (he was the sole breadwinner in the family) was not enough to support their household. I encouraged my client to confide in his wife and to bring her to an office meeting with me so we could discuss their options.
My client’s wife was not happy to learn that her husband had been using credit card advances to make up for his reduced salary, but once she understood the reality of their household budget she agreed to get a job and to cut back on household expenses. Getting his wife’s “buy in” was a great source of relief for my client and at last report, the family is recovering nicely from the bankruptcy filing.
Bankruptcy can and should be a wake up call to you and your family that something needs to change. Smart bankruptcy filers use their fresh start to eliminate bad financial habits, live below their income and focus on needs as opposed to wants.
If you live in the Atlanta are and want sound advice about how bankruptcy can help you now and in the future, please call me at 770-393-4985.