Budgeting, Credit Counseling & Credit Reports

How do I make a budget?

In order to determine if you should be considering bankruptcy, you should create a monthly budget so you can see what, if anything, you should have left at the end of each month to pay toward your debt. Your budget should be realistic and based on averages. Hence, if your income or certain expenses fluctuate, use figures that are an average of 12 – 24 months. Otherwise, your budget may not be dependable. For example, “home maintenance” is a category that varies greatly month to month. You should combine all expenses in this category and divide by the number of months you have used. It is unrealistic to figure little or nothing, and then with one major repair, you can no longer afford to pay toward your debt. Thus, if you are realistic from the beginning, you will not waste precious time or money struggling to repay debt that you may not be able to afford, or committing yourself to a monthly payment that you cannot maintain. (This is why many repayment plans, either through Chapter 13 or credit counseling, fail – because budgets do not plan for unexpected, fluctuating expenses!)

Do not forget to include all your expenses, even those that creep up rarely, such as vet expenses for pets, title/license renewals, etc.

NOTE: The above tools are great for getting an idea of where you are spending your money. However, when you are ready to prepare for an appointment to review your situation with us, please use.

I’m not sure what I owe?

Credit Reports from the Big Three:

  • Experian: or call 1.800.682.7654
  • Transunion: or call 1.800.916.8800
  • Equifax: or call 1.800.685.1111

Consolidated credit report from all three of these as well as information on how credit reports are used and determined:

For Free Credits www.annualcreditreport.com

Credit Counseling for pre and post filing www.acdcas.com

**Be careful!! Relying ONLY on a credit report is not wise. Not all debts are reported there. You should try to determine all debts you owe first by going through your bills AND your memory. If you believe you owe a debt but can no longer find the bill, you should still list that creditor in your bankruptcy. Otherwise, the debt may not be discharged. The credit reports should be used only to supplement what you believe you owe.

How long will it take to pay off my debt if I don’t file?

In deciding on whether to file bankruptcy or deal with your creditors on your own, you should determine how long it will take to pay off the debt if you DON’T file. Forget about minimum payments – those get you nowhere. Look at your statements to verify this. Most of every payment is interest. In order to become debt-free, you MUST attack the principal.

David S. Osterman 603-626-5452