Budgeting 101 Bankruptcy LawAfter 18 years practicing bankruptcy law, I am still amazed that clients often do not understand the importance of monthly budgeting. For individuals facing bankruptcy, a solid, realistic monthly budget will usually be the difference between success and failure. The purpose of budgeting allows you as an individual, or family, to prioritize and control spending. This allows you to focus on the expenses that matter most: housing, transportation, food, clothing, insurance, taxes, etc. Below are some helpful tips to get you started even if you are not facing bankruptcy!

Write it down:

This point simply cannot be emphasized enough. If you are not writing it down (or using an app or spreadsheet, stone tablet, whatever), you are not holding yourself accountable.


  • Rent $1,250
  • Car Payment $475
  • Food $400
  • Gas $125
  • Tolls $25
  • Insurance $85

Track your spending:

You do not have to list or write down every penny you spend. In fact, trying to accomplish this goal usually ends in frustration and giving up (I speak from personal experience!). Instead of tracking spending, try putting aside a certain amount of funds for other items that are not a fixed cost. For example, $100 a month for “Shopping.” Try the cash envelope method and put aside $100 cash marked “Shopping,” when that cash is gone, so is spending for shopping.


Try the 50/30/20 Plan as recommended by Senator Elizabeth Warren* where 50% of your income goes to necessities; 30% lifestyle choices, and 20% to savings. Although this may seem like a daunting task, it is doable.

If you find yourself unable to meet all your financial requirements despite setting up a budget and adhering to it, maybe filing bankruptcy is necessary. In a Chapter 13, you will be required to pay certain creditors but how much depends on your income, type of creditor, and amounts owed. Let us work for you to review your budget, evaluate if a bankruptcy is what you need and get you back on track to financial stability.

*Rob Berger, 7 Tips for Effective and Stress-Free Budgeting Forbes Online