It's an increasingly common problem. You want to declare bankruptcy, but you're told your expenses are too low. You need to find a way to increase your expenses or decrease your income. What do you do?

Why Are Your Expenses "Too Low"?

When people are in debt, they often reduce their expenses by a lot. Commonly, they move in with their parents so they don't have to pay rent. The problem is that Chapter 7 bankruptcy law determines whether you can reliably pay your debts using your expenses and your income. If your expenses are too low, then it may look like you can afford to pay off your debt.

What this ignores is the fact that living with your parents, or living in a cheap housing situation, is often a short-term solution. It won't help you pay off all the debt, because you need to get out of the situation. If you're living with your parents, it may actually be to your benefit to go out and get an apartment, so you can declare bankruptcy.

Have You Included All Your Expenses?

It's easy to forget expenses. When it comes to bankruptcy, they aren't interested in one-off expenses such as buying a car in cash. They're interested in recurring expenses and essentially expense, such as rent, utilities, and recurring medical bills. Go over your bank statements and credit card statements with a fine-toothed comb to make sure that nothing is missing.

Can You Complete a Chapter 13 Bankruptcy?

If you don't qualify for a Chapter 7 bankruptcy, you may still be able to perform a Chapter 13 bankruptcy; the restrictions are much more lenient. A Chapter 13 bankruptcy involves creating a scheduled payment plan to pay off your debts, rather than liquidating all your debts. It's generally very favorable, because interest rates can be reduced or taken off at all. A Chapter 13 bankruptcy doesn't give you an empty slate the way that a Chapter 7 bankruptcy would, but it does give you a way to pay back your debts.

When your expenses are too low to declare bankruptcy, you may need to adjust your lifestyle, or consider a different type of debt solution. The best thing you can do is talk to a professional. Speak with bankruptcy lawyers like C. Taylor Crockett, P.C. about your current situation. They'll be able to tell whether you need to make major lifestyle changes in order to qualify.