Real Bankruptcy

Some Alternatives To Get Cash Before You File Bankruptcy

This is a pretty comprehensive list about how to get some more liquidity when you feel you are close to bankruptcy. Of course, once you have some cash, you still need to resolve the underlying problems in your finance.

As soon as you realize you're over your head in debt, try contacting your creditors immediately and explain your situation. They may be willing to work out a modified payment plan for you to pay what you owe them.

Or, you may contact a nonprofit credit counseling service that will work with you and your creditors to develop a debt repayment plan. Such plans require you to deposit money each month with the counseling service and they pay your creditors. Their services for you are confidential. You can contact one such service, Consumer Credit Counseling Services, in business since 1974, by writing to the National Foundation for Consumer Credit, Inc., 8611 Second Avenue, Silver Spring, MD, 20910, or calling them at (800) 388-CCCS to request the location of a local office.

A second mortgage or home equity line of credit is another possibility, but think carefully before taking either of these on. While these loans may allow you to consolidate your debt, they also require you to put your home up as collateral. If you miss a payment, you could lose your home.

If you're having trouble meeting the mortgage payments, contact your mortgage lender and explain your circumstances. You may be able to make partial payments or have your loan rewritten.

You may be able to borrow from your retirement fund if you have one through your employer. Repayment must take place within five years, but may be made through payroll deduction. (All the money is repayable, though, even if you lose your job for any reason. If you don't pay it back, the outstanding balance may be subject to taxes and penalty.)

You might want to borrow from life insurance. Of course, if you don't repay what you borrow during your lifetime, the loan balance will reduce the life insurance proceeds upon your death.

If you sell securities, sell depreciated securities first.

Stop funding retirement plans, including 401(k)s, to keep assets liquid.