Whether individuals file Chapter 7 or Chapter 13 bankruptcy, they will have to complete a considerable amount of paperwork to obtain the debt relief they need. When filling out this paperwork, one critical step individuals must take is to list all of their monthly expenses.
This might seem like an overwhelming task, but individuals pursuing debt relief through bankruptcy can take proactive steps to make this process easier.
So, what can individuals do to track their expenses?
Review financial statements
Now that individuals can easily access their financial information through online banking or online statements, it is easier to get a big picture of their expenses. However, online banking often only tracks expenses through a credit or debit card. It does not track cash payments.
Fortunately, there are several methods to track cash and card payments, including apps. So, individuals should regularly check their online statements, but also keep track of receipts or cash payments.
Divide all expenses into categories
When tracking expenses, it is easier if individuals divide them into essential and nonessential payments. This includes all expenses, such as:
- Rent or mortgage payments
- Insurance payments, such as auto or health insurance
- Electric bills, water bills or other utilities
- Auto loan or maintenance payments
- Gas and grocery expenses
- Entertainment expenses
This is beneficial because individuals can see precisely where their money is going, as well as how much of their income goes into each category.
Dividing these expenses into different categories also helps individuals create an organized inventory of all of their expenses. Then, they can easily transfer this inventory to their bankruptcy paperwork.
Why is this important?
New Mexico bankruptcy courts require a list of expenses in paperwork, so they can obtain an honest depiction of the individual’s financial situation.
Therefore, individuals must list their expenses as precisely as possible. And tracking expenses carefully can help individuals do this efficiently when it comes time to fill out their paperwork.
Dealing with debt and finances can be stressful. When individuals decide to pursue bankruptcy, they might not know where to start. In these cases, it is often beneficial to speak with an experienced attorney.