Excess debt, unanticipated expenses, unemployment, divorce, disability, death of a breadwinner or a legal judgment can create a financial crisis.  When faced with this trial consider the following strategies:

• If your monthly debt payments are more than you can live with, seek the help of a local Consumer Credit Counseling center.  This nonprofit organization can help you budget your loan payments and negotiate reduced payments to your creditors.  Call the National Foundation for Consumer Credit at (800) 388-2227 to locate a center in your area.  The typical charge for the service is $10 a month.
  
  
• Prioritize the assets you can sell.  Get rid of assets that you don't want or don't use frequently.  Sell depreciated investments first and use up to $3,000 of losses a year to offset other sources of income.  Sell appreciated assets next but be prepared to pay tax on the gain to the extent the gains exceed your losses.
  
  
• Employ the drastic money saving strategies in the section Investments: How To Be a Saver.  In addition, consider working a second job and working weekends.
  
  
• Raise cash by borrowing from your company retirement plans and life insurance policies.
  
  
• Turn off automatic payroll contributions to 401(k) plans, savings and stock purchase plans, and charitable organizations.
  
  
• Suspend savings programs for college education and consider invading the funds if necessary.  If college is fast approaching, your reduced income and reduced asset base will enable you to qualify more easily for college financial aid.  If college is far off you'll probably have time to accumulate the funds with a little more effort.
  
  
• Sell your home as a last resort.  The cost of finding a suitable replacement could exceed what you are paying now.  However, if your house is larger than what you need, consider selling it. 
  
  
• If you are having trouble making your monthly house payments, contact the holder of your mortgage immediately and explain your financial problems.  Your lender may agree to partial payments, rewrite the loan to achieve lower payments, or even agree to a period of non-payment.
  
  
• Avoid bankruptcy if possible.  Generally your credit will be shot for ten years which may hamper your ability to get a job or rent an apartment.  IRS obligations and student loans will not be discharged and child support payments will still be required.
  
  
• If you are forced to consider bankruptcy there are four methods that may provide you relief from your creditors: (1) Chapter 7 or straight bankruptcy, (2) Chapter 11: Business reorganization proceedings for individuals and other entities, (3) Chapter 12: Financial reorganization for the family farmer, and (4) Chapter 13: An alternative to Chapter 7 that gives individuals a chance to work with his or her creditors.
  
  
• If you opt for Chapter 7 or 11 be sure to file a tax return for the bankruptcy estate and to elect a taxable year that will minimize your taxes.  Publication 908