Bankruptcy is a process governed by federal laws that will cancel many of your debts through an order of the court. It does not cancel ALL types of debt, however, and that is important to note before filing – if the bulk of your debt is unable to be canceled, will it really help you or simply cause your credit score to take a further dive and continue to haunt you for at least 7 years, if not more?



For creditors, when their debtors file bankruptcy, they are given a chance to get a portion of the money that the debtors are obligated to pay back, as designated by the court. If debtors do file for bankruptcy, creditors must immediately stop attempts to collect the debts which provides temporary relief and a period of less stress for the majority of individuals filing for bankruptcy, but it doesn't stay for long! After a bankruptcy is filed, you'll find it difficult, if not impossible, to gain any kind of credit for several years; your employer can let you go or a new employer can refuse to hire you based on your bankruptcy; and it can be difficult to find a place to live if you don't already have a home.

Sell Your Stuff

The first thing you can do if you find yourself on the brink of filing for bankruptcy is to sell your “stuff”, otherwise known as your assets. Yes, this hurts, but if you go through with a bankruptcy you can pretty much say goodbye to everything you own anyway.

If you have a car loan, try to turn the vehicle in and get something used and without a car payment. If you already have a car without a payment, consider selling it if it's worth much; and buying a less expensive car and using the rest of the money to apply towards bills. If possible, go down to one vehicle for the family for awhile.

If you have a mortgage and a home, consider selling the home to live someplace less expensive.

Sell any belongings you don't NEED that can give you some much needed money right now and apply all money from the sale of items to your debt.

Increase Your Income

You may temporarily need to work more often and find ways to increase your income in order to relieve some of the money pressure you're experiencing. This may include getting a night job if you work during the day; working weekends if you currently only work during the week; or finding ways to earn money from home on your computer or otherwise. There are many ways to earn additional income, and you can do many of them without any investment beyond your time. Yes, working more cuts into family time, but if you realize it's temporary and the additional money will be used to repay your debt and avoid bankruptcy, you can get through this temporary period.

Consider odd jobs for neighbors (lawn mowing, dog walking, and errand service), writing articles online for website owners who pay writers, using the experience and skills you have at your current job as a side business opportunity.

If you aren't sure how to get business from a side business, then head out for a part time job anywhere you can find one. Don't hold out for a “high paid” position, because all the time you spend looking can be spent making $8 an hour or so at a part time job near your home. You can keep looking for something better in the meantime, but the idea is to find a part time job to start earning extra income as soon as possible.