Being organized about your finances can literally save you thousands of dollars! It might be a pain to take the time to keep everything filed, dated and put together, but it’s one of the best investments on your time you can find if it gives you opportunities that you would never have had otherwise.

A couple of weeks ago one of our writers, JSteele did an article on how being organized about paying your credit cards can prevent fees and keep your credit score healthy. Today, I wanted to talk about how my choice to be organized played a huge part in my bankruptcy and my recovery.

When my husband and I chose to declare bankruptcy is was because we were facing a wage garnishment that we couldn’t afford to have go through. By the time my husband found out about the garnishment, the company we owed had already contacted his HR department, and they were going to put the first part of the garnishment through with his next paycheck. The total amount of the garnishment was over $1000, and it was to be broken down and taken our of three of his checks.

We knew we were going to declare bankruptcy before we found out about the garnishment. We sat down together, and talked about it, and decided that if over a thousand dollars was going to be taken from us to cover this medical bill (whether or not we could really afford it) that we would rather use that money to take care of all of the back bills we owed instead of just one.

Things had been getting progressively worse that year, and we had very little money to live on, much less pay down the back bills. When we finally decided to go ahead with out bankruptcy, we had only $400 to put down on the $1,100 cost of declaring bankruptcy. We were able to get the $400 by paying our rent late. Robbing Peter to pay Paul, but in our case it worked.

So, now you know the backstory…how did organization play a role? I still believe to this day that the main reason our lawyer accepted our case with so little money down is because we were completely organized. We dressed as nicely as we could when we went for the initial consultation, and we took every single bit of information we needed with us.

We filled a 4 inch black 3-ring binder up with every single bill we had, and all of the information that we thought they might need to work our case. Some of the things we organized and took with us included:

• Payment stubs from our checks – 6 months worth each.
• Bills and contact information for every company that we owed money to. (That we knew of…debt is frequently bought and sold, so we took in the information on the last known owner of our debt.)
• The information on the pending garnishment, which my husband obtained from his HR department.
• The information on a past judgment we had.
• The previous year’s tax returns.
• Copies of our driver’s licenses and our social security information
• Copies of our current credit reports.
• We also took a check book so that we could work out a payment schedule and leave the pre-dated checks with them. (Which they turned out not to accept, but we were prepared to do it).

What was the result of taking all of this stuff in to our first meeting with our lawyer? He took us seriously. He said

“Wow, you sure are organized…I wish everyone would do this.”

Actually it had never occurred to us that everyone wouldn’t do it right off the bat. But, miraculously, our lawyer allowed two poor, and about-to-be-bankrupt people to make payments with him. He took our case, stopped the garnishment, and the rest is history.

I can honestly say that being organized played the biggest role in our recovery from bankruptcy as well. We knew that once our bankruptcy went through we were going to literally have to not mess anything up again.

We went from tossing our bills in a specific drawer to marking them on a calendar as they arrived, or in some cases setting up automated payment plans.

It was being organized about our bills that led us to understand that we didn’t make enough money to really support ourselves. (After all, when everything’s a mess it’s hard to tell that what you make isn’t enough.) We used to live our lives by just jumping over bills like hurdles, at the last possible minute. Usually by not paying something else that was due.

By getting organized about what we owed, and what we could afford to pay, we finally realized that the total of our normal bills in a month, rent, utilities, insurance, etc. exceeded our income. It was no wonder we were living paycheck to paycheck and something was always late.

Now, you are probably thinking “You’d have to be pretty stupid not to know that…no wonder you went bankrupt!“. Well, you’d be right. We may not be the brightest crayons in the box, but by organizing our finances we’re not only getting along as a couple better than before, but we’re well on our way to recovery from our bankruptcy. That is how essential organization is, and that is how deadly avoidance of your bills is!

Based off of our experience, I am betting that some of you out there have your own organization stories. Maybe not with bankruptcy, but I’ll bet that organizing your finances makes your life better too. Can you tell us what your system is? How being organized about your bills helps you each month? We’d love to know!

Keep Reading:

• Will Credit Counseling Hurt Your Credit Score?
• Repairing Your Credit After Bankruptcy Part 1
• Repairing Your Credit After Bankruptcy Part Two

This entry was posted on Monday, November 3rd, 2008 at 13:09 and is filed under Bankruptcy FAQ. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.