If you are a single mom and you’re thinking about filing for bankruptcy, you should arm yourself with as much knowledge about this process as you can. Although you’re already juggling multiple responsibilities, making this effort now can help ensure you make the most of this opportunity.
If you don’t earn a particularly lucrative income, you will likely pass the Chapter 7 means test. This means you’ll be able to choose between filing for Chapter 7 and Chapter 13 bankruptcy. If you qualify for Chapter 7 relief, this is likely a preferable option, as you will be able to secure a discharge of your eligible unsecured debts without having to repay your creditors first, as you would in a Chapter 13 scenario.
With that being said, if you own luxury property and/or your home is at risk of foreclosure, you may benefit from a Chapter 13 filing instead, even if you’re eligible to file a Chapter 7 case. Ultimately, the protections that Chapter 13 affords may be preferable under these circumstances, even when a filer doesn’t fall in a higher income bracket.
Once you have chosen a pathway forward
Having a clear picture of your financial situation will help streamline the process and better ensure that no debts are left out of your bankruptcy filing. As a result, you’ll want to gather information related to your income, debts, household expenses, financial assets, etc. before starting any bankruptcy-related paperwork.
It’s also important to be proactive when thinking about your long-term financial health once the bankruptcy process is complete. Otherwise, the fresh start that you will have worked so hard to secure may soon devolve into additional struggles. If you don’t already have one, you’ll want to start by creating a budget that accurately reflects your income. Regardless of whether you have one in place at present, you will likely need to adjust for the expenses side of your budget to reflect what you’ll owe regularly after your bankruptcy is filed. Making a budget can help you avoid falling back into financial distress.
Filing for bankruptcy as a single mom may seem daunting, but in making this effort, you will likely place yourself in a strong position to be there for your kids – and yourself – in ways that you are struggling to be now. This is an act of courage and one that you should be commended for.