One of the many important steps in preparing for (or thinking about) filing bankruptcy is creating a household budget. Most Americans don't have one, and it is critical to understanding how your money is spent and why you are in a financial hole. It is also key to maintaining your fresh start after your bankruptcy is complete. You cannot continue to spend more than you earn and get back on your feet financially.
In helping people do this here in New Jersey, I have found that there are two expenses that are often overlooked: daycare and educational expenses.
If you have young children you know how expensive daycare can be. Oftentimes it is the reason one spouse does not work; he or she cannot get a job that pays significantly more than daycare costs. Some people are fortunate and have grandparents, friends, neighbors, and the like, that will take on the supervision of their children while they are at work. But those who do not, really feel the pinch.
This expense is often left out, but it is considered a necessary expense, and is included in the means testing calculations. In fact, those expenses can often mean the difference between being able to file a chapter 7 and having to file a chapter 13.
School and Educational Expenses
Another expense that is often overlooked, and for the same reasons, is school expenses. Parents these days are expected to pay for more and more supplies, materials, and equipment for children in public schools (let alone tuition for private schools).
This also helps with means testing, but is capped at a maximum amount per child per month. Anyone preparing to file bankruptcy should consider these expenses carefully and include them in their budgets.
So What Do I Do?
If you are looking for more information about bankruptcy and the bankruptcy process, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.
If you live in southern New Jersey and are considering filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.