When your financial situation is dire and you are plagued by constant phone calls from creditors trying to collect their money, filing for bankruptcy may seem like the last resort to your predicament. Before you actually take the step and file for bankruptcy however, consider these steps:

The Game Plan

Take some time to go over all your finances. Review your bills: this includes all of your monthly fixed costs such as your mortgage and car payments, but also other living essentials such as your utility bills, grocery bills, insurance, credit cards and all of your other monthly costs. Be thorough and do not overlook anything. After you collected all of your expenses, separate the essentials from the non-essentials. The roof over your head will take precedent over the new pair of heels. You need to prioritize and be willing to part from the things you do not really need.

Make an Allowance

Now that you distilled the cost of life to the exact dollar amount of everything purchased and paid you can set yourself an allowance. If you are running low of cash by the end of the month you will learn how to make that last dollar last until the next pay check, instead of indulging and buying things on credit. It may be a difficult concept to get used to but once you try it you will find how empowering it can be.

Work as a Team

It can be difficult to deny your children things they want at the grocery store. Get the kids involved and explain the benefits of having an allowance. Reward them for staying within the allowance by letting them keep a portion of the money saved.

Turn your Stuff into Cash

Raid your home for possessions you no longer need, want or desire. Have a garage sale or put them up for sale on online auctions. You will be surprised by the amount of cash you can make from your unwanted stuff. And you will declutter your home in the process.

Reap the benefits of Credit Counseling

There are many benefits of working with a credit counseling agency. Be sure you are working with a reputable agency – scammers are notorious for posing as legitimate agencies and charging exorbitant fees. You can discuss the possibility of negotiating a payment plan with your creditors or the benefits of a debt-management plan with your credit counseling agent.