Financial difficulties can occur in anyone’s life. When you think financial difficulties are more than you can handle, don’t let bankruptcy become your first thought. Bankruptcy should be considered as a last resort, not just the first thing that pops into your head when the going gets tough. Instead, consider these options.

One of the first steps in avoiding bankruptcy is to make budget. If you have laid out a plan for your incoming money, you will be less likely to spend it on unnecessary items. You will therefore make the money last longer and work harder for you. Setting up a budget is crucial to help regain control over your finances. If you already have a budget setup, review it ruthlessly and start cutting wherever and whatever you can so you can return to profitability.

Another option to bankruptcy is to consider exactly what your debt is. Perhaps you have purchased a home that is more than you can afford or maybe you have too much vehicle debt. If either of these is true, you may need to consider downsizing. If you are paying out more than 40% of your income on a house loan, it is definitely time to consider selling your house and buying a less expensive one. The same applies to vehicles -- maybe this is not the time to be making payments on a Lexus when payments or paying off a late-model Toyota or Chevy makes more financial sense to keep more money in your pocket and your creditor's pockets each month.

Not only do you need to consider what type of debt you have, you also need to consider what items you can sell to increase your savings. Often, selling items you no longer use can help with the month to month struggles you might be experiencing. Maybe you have a lot of old books or CD’s laying around that you no longer use. Selling off a few unwanted items can help free you from some financial burdens.

We have all heard this time and time again. But, if you are having financial hardship, cut up your credit cards. Under no circumstances should you use a credit card, not even the one you have set aside for “emergencies”. It is possible that you truly only use your credit card for emergencies. But in a time of financial difficulties, your view of what constitutes an emergency could change. Without access to a credit card, the need to fix the air conditioner on your car doesn’t seem so dire.

Even though you need to cut up your credit cards and not use them anymore, you still need to find a way to pay for them. Begin by moving all of your credit card debt to the card with the lowest interest rate. If all of your credit cards carry a high interest rate, try negotiating with the companies to see if they can lower your rate. Very frequently, credit card companies are willing to work with you by lowering your interest rate and even allowing you to skip a payment, because they know that if you do end up declaring bankruptcy, it is very likely that they will only see pennies on the dollar.

Another option to avoid bankruptcy is to increase your income. Although this may seem very obvious to some, it is often overlooked. Cutting back on your expenses may not be enough. Therefore, working overtime or getting a second job may be the only viable option. Try delivering pizzas, mowing lawns or painting houses. If you are good with computers, there is frequentlyh a need in most areas for someone who will fix computers or even do in-home teaching of computer basics to novices. Any extra money you can bring in each month can go straight towards your current debt.

When drowning in debt, bankruptcy doesn’t have to be your only alternative. There are many viable options that should be looked into. So, before filing bankruptcy, be sure to exhaust all other options. Remember, a bankruptcy filing stays on your credit report for 7 years and is as visible as a sore thumb when you apply for new credit, even when things return to a positive cash flow situation, so you definitely want to only consider bankruptcy as a LAST resort when all other options have not worked out.