For those Americans in the dire situation of finding themselves unable to pay off the debts they owe, for whatever reason, they have probably heard only too often about the possibility of having to declare bankruptcy.
Of course, with the long term consequences of such a decision, most people would prefer to do anything they can in the first instance to avoid bankruptcy.
But what can you do? Well the obvious answer is to sell your assets to pay off debts, thus avoid bankruptcy.
But what should you sell and what should you not sell? The golden rule here is that it makes no sense to sell on assets that, under your state law, would be protected anyway if you ended up filing chapter 7.
This, of course, varies in the specifics from state to state, but as a general rule it will cover your primary house, up to a certain value, you pension plans, necessary furnishings and a reasonably priced primary vehicle.
Selling assets to pay off unsecured debts such as credit cards makes little sense.
Unsecured debts are precisely that - unsecured.
This means that the credit company provided that loan with no collateral to back them up and therefore can repossess nothing in claim of the outstanding balance.
But if you still insist you want to avoid bankruptcy by selling other assets, you could sell, if you have one, a second or investment home or a second vehicle you might own.
This could raise finances to lower your outstanding balance.
But just remember that if you do end up in a situation where you are unable to avoid bankruptcy, chapter 7 protects your main home, your primary vehicle and your pension plans, thus giving you little reason to consider selling these incredibly important assets to pay off debts.