The DOs and DON’Ts of How to Spend Your Money
When There Isn’t Enough to Go Around

DO

1. Always make sure you have food on the table, a safe place to sleep and get necessary medical care, even if it means that you see a doctor that requires pre-payment.

1. Pay your mortgage if you plan to keep your home.  Remember to pay the real estate taxes and condo fees.  Neglecting to make those payments can land you in foreclosure court and add expensive legal fees to the cost of keeping your home.
    
   As for renters, pay your rent if you want to stay in your apartment.  If you simply cannot pay your rent and need to move into a less expensive place, you may decide to stop paying your rent.  If you stop making payments, don’t use this money to pay other bills.  Save it as a fund to use for moving.

1. Make the payments required to keep your essential utility service from being disconnected.  You need heat and electricity and it can be costly to restore service after disconnection.

1. Pay your car loans or leases next, if you need a car and it makes sense to keep the car you have.  You may have a car lease that is too expensive for you, or you may owe much more on your car than it is worth.  If you keep your car, make sure that you continue your car insurance. 

1. Pay any child support debts you owe.  These are not dischargeable in bankruptcy and will remain as a debt until paid. 

1. If you are in economic hardship because your business is suffering, be sure to pay your sales tax and trust fund taxes.  A trust fund tax is money withheld from an employee's wages (income tax, social security, and Medicare taxes) by an employer and held in trust until paid to the Treasury.  These taxes are not dischargeable in bankruptcy. 
   
   You should talk to your bankruptcy attorney if you are behind on your income taxes.  Certain taxes are dischargeable, but there are some complicated rules to determine which you can discharge.

DON’T

1. If you are making reduced mortgage payments or not making payments while negotiating a mortgage modification, DON’T use that money instead to pay other bills.  Set that money aside to make mortgage payments once the modification has been approved.
   
   
2. Don’t refinance a low interest-rate mortgage for a high interest-rate emergency mortgage in order to save your home from foreclosure.  Over time, the higher interest loan will create a larger burden for you than did your original mortgage.
   
   
3. Don’t pay a company to negotiate a mortgage modification for you.  The government website www.makinghomeaffordable.gov offers free information and gives contact information to HUD counselors who will help you with your mortgage for free.
   
   
4. Don’t pay a particular creditor lower on your priority list simply because the creditor harasses you or threatens to report your delinquency to a credit bureau.  Chances are, the creditor has already reported you, and if it hasn’t, it is unlikely that a collector hired by that creditor will do so.
   
   
5. Don’t avoid making tough choices.  If you have a car or a home that you simply cannot afford, think about how you can obtain more economical housing or a less expensive car.
   
   
6. Don’t ignore bills.  You’ll need to know when judicial action is being taken.  If you do not appear in court when a creditor takes action, a default judgment can enter and you will lose your opportunity to dispute the amount of the debt and to negotiate the payment terms.