Using Your DTI When Considering Bankruptcy

What is DTI? DTI, or Debt to Income is referring to the ratio between your income and your debt. In this case, your income includes all of the money you receive each month, including all of your salary payments and your spouse's income if you are married. It then looks at your debt. This includes all of the debt you have to pay each month. In short, this is why you might be filing bankruptcy: you simply are not making enough income to cover your debt payments. When considering this, it is also important to note that this is only one part of the bankruptcy process. An attorney can help you to qualify for other aspects as well.

Understanding DTI

What is DTI? To further explain debt to income ration, consider whether you have the funds to pay your bills each month. To determine what this ratio is, take all of your monthly debt payments including:

• Monthly mortgage or rental payments
• Your auto loans
• Other secured loans
• Credit card payments
• Other debt payments

Then, determine what your monthly income is by adding up all of the income you receive each month. This number that is resulting, the comparison of the two figures, is your debt to income ratio. If you were to apply for a loan, a lender would ask what this number is, or use your credit report to determine it. The higher it is, the less money you have to repay your debts each month, making you a higher risk.

In bankruptcy, this ratio can help a bankruptcy trustee to determine if you should file for bankruptcy as well as what type of bankruptcy you should file. Your attorney can help you to determine how a high debt to income ratio can help you to qualify for bankruptcy. In most cases, this is necessary in order to pass the means test. On the other hand, if you have enough income to pay your debts, you may not need to file bankruptcy.

Hire an Attorney

When it comes to understanding a DTI, it is always best to look at your individual situation. For that, hire an attorney. The attorney will ask you questions and calculate this information for you. The attorney will then help you to learn if you qualify for bankruptcy, or not, depending on this information and other information you have. The key here is to know what to expect and your attorney can help you to accomplish that.