Steps to Take Before Chapter 7 Bankruptcy

Chapter 7 bankruptcies are being filed more than ever before. The United States economy has been in a shambles for several years. Individuals have lost jobs, become underemployed, watched their real estate property nosedive into an upside down mortgage, lost their pension, folded up their small business, become crushed by medical bills not covered by health insurance and much more. Financially, it is a challenging time around the world. If a person finds that the bills are piling up and bankruptcy is looming in the not-so-distant future, there are some steps to try a last ditch saving of the bank account.

Cut up the credit cards: If a person has begun to rely on credit cards, now is the time to cut the cord. After Chapter 7, there will be no more plastic options, so it is better to make the adjustment as soon as possible. If a person goes cold turkey and gets used to it, he or she may tighten up the outflow and start to see light at the end of the tunnel.

Write down everything that's spent: Many people can't really tell you where they spent all the money that used to be in their wallet at the end of a week or even a day. A coffee here and a burger there may not seem like much, but it all adds up to an empty wallet. It can be illuminating to write down each expenditure for a week or two and add it all up. You may be shocked to find that you dropped forty dollars at Starbucks last week. Plug those leaks and you may have more cash than you thought.

Get a second job: Freelance, moonlight, babysit, or get a newspaper route. It doesn't matter what you do, as long as you get some additional cash flow entering your world. In the case of a married couple, two extra part-time jobs add up to big money and a way to get your head above water.

Rent a room in your home: If you have an extra room or if your kids can double up, you can bring in some rental income by allowing a single person or college student to take up residence under your roof. This could help the person needing an inexpensive rental and make a big dent in your red ink.

Sell something: Do you have a motorcycle, camper, or extra car? If you sell it, you can generate a chunk of money and get rid of insurance costs, too. Even a garage sale can clear out your storage space and provide income.

Chapter 7: If you try all of the above and you're still drowning in debt, it will be time to contact a savvy bankruptcy attorney. At least you will have tried everything. The extra cash in your bank account can give you a cushion to get through this and money to pay legal fees.

Many individuals are considering Chapter 7 as a way to dig out and start fresh. Try these steps first and either regroup or realize you've done everything possible and now it's time to place the call.