LOOK AT THE MONTLY EXPENSES

Multiply your weekly expenses by four, and add any recurring expenses. Some that you may have are: rent or mortgage student loan renter’s or homeowner’s insurance car insurance car loan internet access subscriptions health club membership utilities mobile phone .

You take the forms, plus the court fee, to the bankruptcy clerk. You cannot pay by personal check, because your credit is no longer viewed as reliable. You must pay cash or with a cashier's check, certifed check, or money order. After you file your forms and pay the fees, you can stop paying on your debts. Also, you may arrange to have wage attachments and payroll deductions for debt repayment stopped at this time. You may not sell or buy anything, however without the courts permission. Your creditors are notifed that you have fled for bankruptcy. They are expected to stop calling you for payment, but they have 60 days to file an objection regarding the discharge of any debt that pertains to them. A month or so after you file, you go to the courthouse to meet with the court trustee, who determines what of your property can be turned over to your creditors.

Because neither the state nor the federal government wants you destitute, some items are identifed as exempt so that you have the ability to start over. Everything else goes toward your debts. Exempt items include any equity in your home or car, work tools that you need, furniture, and clothes although many exempt items are exempt only up to a certain dollar amount. Even if an item is identifed as exempt, you can lose it when you declare bankruptcy if you pledged it as part of a secured debt that had to do with the purchase of the item. The trustee collects and sells all property identifed as nonexempt. The money is given to your creditors. Also, all property used as collateral for secured debts returns to your creditors. (If you want to keep it, you must pay for it.

Now, look over a month ’s worth of paychecks. What is your total take-home pay for the month? Do you have any other sources of income? If you do, add those to your monthly pay to find your total income. If you live in a climate with a variety of seasons, the coldest part of winter and the hottest part of summer can sometimes cause a big jump in your heating and/or electricity bills. Varying utility bills can make budgeting tough, so call your providers and ask for an estimated bill. They will look at your annual usage and put you on a plan that charges you a uniform fee each month, with periodic meter reading to ensure that you are not under- or overpaying your utilities. This way, you will pay roughly the same amount each month, avoiding unplanned spikes in February and July bills.

Now that you understand how much money you have, and how much you spend, you can create your budget. You probably notice some areas where you can cut down on your spending. For example, if you pick up iced coffee four times a week at an expensive coffee shop, you may be able to cut that out entirely, or reduce it to only once or twice a week. Either way, look over your weekly expenses and tally how much you would like to spend in each category. You can do this by averaging the amount you currently spend, or by giving yourself a reasonable cap.

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