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Law Offices of Carol D. Ellis, P.A. Law Offices of Carol D. Ellis, P.A.
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Analyzing Your Budget To Determine If Bankruptcy Will Help


A final ingredient in the financial picture of a family or individual is a complete  analysis of ongoing expenses and income. Only with this information in hand can  the likely outcome of a bankruptcy be projected, for the family will continue  to have its usual expenses, even if most or all debts are discharged, and will  have to pay them with the anticipated available income.

A family or individual that is considering bankruptcy must therefore put  together a budget of ongoing anticipated expenses and income. Once this is  done, it may become apparent that bankruptcy by itself will do little to solve  the financial problem because, even with the elimination of most or all debts,  ongoing expenses still significantly exceed anticipated income. In such cases,  at least part of the solution will be to pare expenses or to raise income.

Cutting expenses is never easy. Families must look at such major items as  housing expenses. Is cheaper housing available? Other items, such as restaurant  meals, fancy automobiles, vacations, expensive clothes and other luxuries must  sometimes be given up. Smaller savings can be made by conserving energy,  cutting out extra phone service options, reducing or eliminating cable  television bills, and cost-conscious shopping at thrift stores, garage sales  and supermarkets.

The alternative, of course, is to increase income. This can sometimes be  achieved by a spouse working outside the home, though these gains may be offset  by expenses for child care and transportation. A lower income family may be  eligible for government benefits such as food stamps, energy assistance  payments or public assistance.

In any case, budget information is important for analyzing whether bankruptcy  makes sense. It is also critical for determining whether a Chapter 13 case is  feasible, and it is required on the schedules filed in every bankruptcy case.