Is the method of debt repayment by allocating monthly profits equally between family expenses, house rent, and capital preservation Islamically permissible, or is it obligatory to pay all available liquidity and declare insolvency for the remainder?

"Debt is a grave matter, and its danger is great. The martyr may not be forgiven his debt. It is therefore incumbent upon the debtor to strive to repay his debts. The creditor has the right to demand his due. If the debtor's assets are insufficient to cover his debts, and the creditors request the ruler to seize the debtor's assets and distribute them among themselves, the ruler must comply. However, the debtor should be allowed to keep what he needs of clothing, furniture, housing, and tools for his trade. If he is not a tradesman, he should be allowed to keep capital with which to trade. It is not permissible for the debtor to live extravagantly and delay repaying his debts; rather, he must limit himself to what he needs until he fulfills his obligations."