Vance P. Truman, Attorney at Law
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What is a zero-based budget?

You file for Chapter 13 bankruptcy. You know that means that you're going to have to make monthly payments on the balance of the debt until you pay it back. Since you have a steady income, you know it's possible.

However, you also know that this means you'll need to make a strict budget and stick to it. Many experts suggest a zero-based budget. What is this and how does it work?

Essentially, it's just a budget with a total sum of zero every month. It tells you exactly what you're doing with every dollar you have and every cent that you earn. You can balance the two columns -- income and expenses -- against each other, and you get zero.

In some cases, this means that all of your expenses -- rent, the Chapter 13 payments, grocery bills, utilities, and so forth -- consume the entire budget. Sticking to the budget is the only way to make those monthly payments.

In other cases, you may make more than you have to spend. That's great, but you can still use a zero-based budget. You just put in categories for things like investments and savings. You may not be spending that money right away, but your budget still tells you exactly what you have and where every dollar is going so that you can track everything precisely.

Do you think that Chapter 13 is the right type of bankruptcy for you? It's important for you to know what steps to take, what rights you have and how to focus on your financial future.

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