Are You on a One-Way Track Toward Bankruptcy?

We regularly work with clients to dispel myths and stigmas surrounding bankruptcy, but there’s no way around the fact that filing will set you back at least temporarily. In an ideal world, no American would be under so much debt that bankruptcy becomes the only option.

In reality, there are numerous common mistakes that put people on a train headed right toward bankruptcy station. We want to explore some of the common mistakes and circumstances that lead people to file for bankruptcy in Illinois.

Are You Spending Money Before You Earn It? This is probably the most common issue individuals face before bankruptcy. You must live within your means. Failing to budget and account for costs before getting out that credit card is a surefire way to end up in our office preparing for an Illinois bankruptcy case. Too many people assume they’ll be fine because they have a paycheck on the way. Maybe your boss told you they see a raise in your future. Should you start spending like you got that raise today? No – wait until those paychecks are actually hitting before overcommitting your finances. Spend the money you have and not the money you think you’re about to have. Do You Have Nondischargeable Debt Stretching Your Finances Thin? Not every debt is dischargeable through the bankruptcy process. However, nondischargeable debt still counts as an expense that impacts your overall ability to satisfy the debts you owe. Do you have a high student loan bill that’s making it harder to make your mortgage payment? Are you paying significant child support or alimony and not able to make that car payment? Just because you can’t discharge certain debts through bankruptcy does not mean those costs will be ignored in calculating your ability to pay back the ones that are dischargeable. Did Your Family Overpursue the American Dream? The American Dream is to own your own home, but housing costs continue to rise in Illinois and across the country. You have a vision for the home you want to live in and want your kids to grow up in, but can you afford it? Homes are the biggest purchase for most Americans and many purchases far exceed what families can afford. You deserve to be safe and to have the space to live comfortably. Nobody should have to live in a cramped space in an unsafe neighborhood, but buying a home that’s well above what you can afford to spend on the monthly mortgage payments is one of the biggest precursors to a bankruptcy filing. Have You Met with a Bankruptcy Attorney? The theme here is spending. Managing your finances in a way that allows you to build savings and pay for what you owe is how you avoid bankruptcy. But, we understand mistakes happen and circumstances change. The best way to know if you need to file for bankruptcy is to talk to an Illinois bankruptcy attorney. Contact Velazquez Consumer Law, LLC if you’re overwhelmed with debt and need help finding a way out.