How to Create a Bankruptcy Worksheet

Reasons for Pursuing Bankruptcy

You will begin by selecting all the reasons why you are interested in pursuing bankruptcy. When you file bankruptcy, something called an “automatic stay” goes into effect that legally prevents your creditors from contacting you while your case is pending.

Many people also file bankruptcy after suffering a dramatic loss in income. This can be due to a variety of reasons, including a job loss or reduction in pay. Divorce is also another common reason. Often, one of the spouses can no longer afford to keep up with repaying debts after losing access to the other spouse’s income.

Other common reasons for filing bankruptcy include:

• to relieve large medical debt,
• to stop wage garnishment or collections lawsuits,
• to prevent home foreclosure, and
• to prevent auto or property repossession.

If either of these last two reasons applies to you, time is of the essence for your case, and it is recommended that you contact a bankruptcy attorney as soon as possible in order to get the ball rolling.

Furthermore, this list of reasons is not exhaustive. Select “Other” to input additional reasons that you feel you might be a good candidate for filing bankruptcy. Keep your reasons short, as you will be able to give a more thorough explanation for your particular financial situation when giving your case explanation.

Nature of Debt

Indicate here whether your debt is personal, from a business you own, or both. If part or all of your debt is business debt, be sure to include the related debts in your answers to the remaining questions.

Case Explanation

When entering your case explanation, this is your chance to be more descriptive as to how you found yourself in your current financial situation. Briefly explain your income and major expenses.

Types of Debt

Next, you will need to estimate the amount of each type of debt that you owe. Try to be as accurate as possible. It may be a good idea to obtain a recent credit report for this step.

“Personal loan debt” includes all loans for which you are personally liable for repayment. If the debt was acquired in your capacity as a sole proprietor or as a partner in a partnership, then chances are you are personally liable for such debt.

“Legal judgment debt” is any debt you owe as a result of suffering an adverse legal judgment. For instance, if you were found liable in civil court for causing someone’s injury and are therefore liable for paying his or her medical expenses, then include the judgment amount here.

Mortgages and Auto Loans

Select whether or not you are responsible for repaying any mortgages or auto loans. If so, select whether you are up to date on the payments. If you plan on keeping your home or car, then it is recommended that you continue to make the required payments. However, you may be able to renegotiate your payments.

For instance, the Home Affordable Modification Program (HAMP) is a government program designed to help homeowners facing foreclosure. Depending on your situation, this legislation may require your lender to modify your repayment plan.

Income and Expenses

In this section you will try to be as accurate as possible in estimating your current monthly income and expenses. It may be helpful to use the average of your monthly income and expenses over the past three to six months in order to give you a better picture of your financial circumstances.

Real Estate and Personal Property

Next on the bankruptcy worksheet you will itemize all your valuable possessions. “Personal property” includes any assets you own besides real estate and includes things such as:

• cash in hand,
• bank accounts, and
• retirement accounts.

Final Steps

Once you have completed all the steps, you will be able to use your worksheet as a snapshot of your current financial situation. This can be helpful when combined with online tools or an experienced bankruptcy expert who can evaluate your options to determine whether bankruptcy is right for you.

However, as a general rule of thumb, bankruptcy is often a good idea when the value of your total debt is more than the total value of your assets. If you fall into this category, then it may be time to get serious about filing bankruptcy.

Ready to Get Started?

Click here to create your bankruptcy worksheet today.