When you file bankruptcy, your financial situation is going to change dramatically. You must ensure that you are prepared for the changes that are going to come. One way that you can do this is to set your budget. This gives you an idea of what you can afford and provides you with a snapshot of where your money is going each month.
You have to base your budget on reality. Start by recording your take-home income. From there, subtract the regular and vital monthly expenses, including your mortgage or rent, car payment, insurance, food, utilities and similar expenses. Once you have those finished, you can assign purposes to the rest of the money that is left. Unnecessary expenses, such as entertainment and clothing, are included in this.
Until you get a handle on your finances, don’t make any impulse purchases or take on unnecessary debt. You need to get your current debts paid off if you have any now. This isn’t going to happen in a Chapter 7 bankruptcy unless you have nondischargeable debts like student loans. You will be paying the trustee for debts if you file a Chapter 13, but you might still have others that weren’t dischargeable.
Once you have your budget set and your financial situation stabilizes some, you might be able to invest. Try to avoid investments that are akin to get-rich-quick schemes. Instead, look for stable investments that are likely to provide you with a good return in the future.
Remember, bankruptcy is a fresh financial start. Using it to create the best financial situation you can will help you for a long time to come.
