Do:

1. Commit yourself to a budget.
Yes, this is always the easiest thing to tell someone facing financial chaos, and sometimes it’s impossible to achieve. But if you face a very tight financial situation, you need to try to maintain daily, weekly, and monthly budgets. It may be impossible to stick to an unreasonable, inflexible budget, but with practice and commitment, you will experience more and more success living within a realistic budget.

2. Find out the current value of your property.
Many people unable to make the payments on their first and second (and sometimes third) mortgages might have options to extinguish mortgages in bankruptcy. Be open to the fact that most property values have decreased in the past year, and look at all viable options.

For example, some lenders (though not many) will work with borrowers to lessen their monthly payments, even when the lender knows there is no equity in the property to secure the loan. You should talk to a local bankruptcy attorney about extinguishing the junior, unsecured mortgages on your property through Chapter 13 bankruptcy.

3. Accept your current financial situation.
Many of our clients come to us after all other options have failed. They have a judgment against them and their wages are being garnished or a bank account is being levied. Avoid the ostrich approach to your financially precarious situation; don't stick your head in the sand and hope someone will come to your rescue.

4. Find ways to entertain your family without spending money.
The Internet is full of thoughtful suggestions on how to enjoy your day without depleting your wallet. Family and friends should be able to recognize that spending time together can be as enjoyable as spending money together.

Don't:

1. Transfer property out of your name.
Trying to hide assets is risky and illegal. If you have an asset that cannot be protected in a bankruptcy filing, you need to discuss your situation with a competent professional. There are legal ways to protect assets; transferring an asset out of your name and immediately filing bankruptcy is simply not intelligent.

2. Max out or take large cash advances from your credit cards.
People always say to me, "I have $5,000 of available credit on a credit card. Should I use it before filing bankruptcy?" This constitutes fraud because you obviously have no intention of paying that money back. Creditors hope they will catch you in this type of conduct so they can make you pay back every penny of recent spending.

3. Buy a car that overextends your budget.
Car purchases are one of the most common drains on your monthly income. Be very careful about taking on a new car payment, especially if your household already has one car payment. That second payment could be the tipping point to financial insolvency.

4. Try to comfort yourself with “retail therapy.”
Many people believe that their self-worth is based on the newness of their clothes or the gifts they buy for their friends. One act of unbridled exuberance can be the difference between a happy new year and one filled with more financial uncertainty.

5. Take your financial frustrations out on those closest to you.
When faced with financial challenges, many people will take out their anger and frustration on the people nearest and dearest to them. This is easy to do, but completely unacceptable. All you will achieve is the alienation of those who care the most about you.