It can happen any number of ways. You can lose your job. Have an expensive medical emergency. Find yourself with three children in college. Be an adult during the current financial crisis. Whatever causes it, you may find yourself in crisis mode money-wise, and need some quick solutions.

There are a number of ways to get through it, to see light at the other end. But it'll take assertiveness and perseverance, and you will have to make some sacrifices. Here are some suggestions.

Be proactive, not reactive. Start working on the problem when you see it on the horizon, not when you can't bear to answer the phone or open the mail for fear of a bill collector.

Assess your situation. And take enough time to do it thoroughly. Record your regular expenses and liabilities. You can do it on paper, in an Excel spreadsheet, in a personal finance program or Website. Pick one system and stick with it, so all of your planning will be coordinated.

Build a budget. Based on that information, create a budget you can live with using paper and pencil or computer software.

Write down everything you spend. Everything. Then compare this regularly to your budget.

Calculate the money that will come in every month and everything that's due every month, quarter, and year.

Identify payments that must be paid in full. This probably includes things like your mortgage or rent, utility bills, and insurance payments.

Contact creditors and negotiate short-term payment reductions. Of course, you can't do this with everyone, or maybe even the majority of your creditors. But you can, for example: try to refinance or consolidate student loans, get the interest on your credit cards lowered, and set up budget plans with your energy company.

Scale back on expenditures where possible. Do you really watch all 800 channels on your cable system? Cut back to basic cable. Go to the library for books and DVDs. Take advantage of resources like Mary Hunt's Debt-Proof Living columns (www.cheapskatemonthly.com). Use coupons, visit garage sales and Goodwill for clothes and household goods, and avoid high-end groceries and restaurants. You don't have to go into austerity mode, but cutting back $10 here and there will add up.

Do not increase your debt. You don't have to cut your credit cards up, but put them in a drawer and don't use them unless you have a dire emergency. Concentrate on paying them off.

Consider a credit card balance transfer. But only do so if you're sure you can pay off the balance in the stated time period.

Save $1 a day on something and bank it. Apply it to a credit card, put it in savings, or use it to buy something you need and have been avoiding buying.

Consider adjusting your retirement deductions. This should be way down on your list. 401(k)s and such are too important to skimp on unless you absolutely must.

Ask your doctor about switching any medications to generics.

Do not rob Peter to pay Paul. For example, no using credit cards to buy groceries or pay bills.

Save on energy. Raise or lower thermostats more than you usually do. Combine car trips where you can. Use the vehicle with the best mileage whenever possible. Have your furnace tuned every year. Use cold water in the washing machine.

Make gifts instead of buying them. It'll save money and can mean more to the recipient.

Adjust your tax withholding. If you're getting a refund, you're giving the government a loan. Adjust your withholding at work of decrease your estimated payments, and you can use that money now.

Evaluate your phone service. Do you know what extras you have, and do you need them? Can you get by with just your cell phones and drop your land line? If your contract is nearly up and you don't use the phone much, consider a prepaid cell phone.

Any one of these ideas taken alone wouldn't seem like it would save enough money to make it worthwhile. But do enough of them, and you'll probably be surprised how much you can save. Use that savings to retire debt, and you'll eventually have enough money to spend on things you've been avoiding. But try to stay out of debt and in the money. Live within your means- spend less than you bring in.

 
What are the immediate effects to my business if I default on a loan?

Drop in business and/or personal credit score. Missing your payments and defaulting on your loans negatively impacts your business credit score. Your personal credit score may be affected, depending on the type of business structure that you have in place.  Read on for more tips on how to protect your personal liability.

Increased interest rates. Your business interest rates (and possibly your personal interest rates) may increase if your credit score dips. Depending on your loan agreement, a higher interest rate could affect the loans that you currently have, as well as future loans you plan to seek.

Foreclosure or seizing of property and collateral. Foreclosure may be the most severe repercussion due to a loan default, allowing lenders to recuperate losses from loan defaults. In this situation, your lender will have the full right to take control and ownership of your property and collateral that you have included in your contract. They normally will sell your property privately or by a public auction, depending on the profit margin.

What steps should I take next?

Negotiate terms with your lender. If you default, you can try renegotiating the terms of your loan contract with your lender. While lenders may not always be willing to renegotiate, if you are successful you can minimize the damage to your business's financial health. Ways to reduce the negative impacts of the loan default include:

• Changing the terms of payment, e.g., paying less per installment but for a longer period of time
• Paying less over more time with a higher interest rate
• Asking your lender to forgive a portion of your late payment and agree to pay on time in the future

Consider government debt relief options. There are some government-backed options for managing debt that you can consider, such as the American Recovery and Reinvestment Act (ARRA), ARC Loan Program. and SBA Loan Program. Read more about Managing Small Business Debt through Government Loans and Refinancing Lifelines here.

Cut costs. Minimize your expenses. Though this may not be an ideal situation, you can consider laying off part of your staff and downsizing your business, among others.

Sell business assets. Liquidating business assets or converting your assets into cash may temporarily help you pay off your loans until you can afford to pay your bills on time again.

Consult a lawyer. Consulting a lawyer about your options may also help you through the process. Learn how to find legal representation for your small business here.

What does this mean for the future of my business?

Difficulty finding new loans. After you default on one loan, it will make it much more difficult to find a new loan. If loans are the chief means of financing your business, then you will be running into some difficult hurdles. You may want to start looking into other methods of funding your business. Read more about alternative financing solutions in I Need Money- Where Do I Get It?

Bankruptcy. If your business cannot repay its loans, you may need to file for bankruptcy. Read more about filing for bankruptcy on our blog Bankruptcy Options for Small Business Owners.
 
What Can I Do to Avoid a Loan Default?

Of course, the best way to avoid defaulting is to pinpoint the pitfalls of bad loans and avoid them at all costs. To avoid loan defaults, business owners should remember the following best practices:

• Have a concrete payment plan before you decide to borrow
• Do not offer collateral and property in your contract that you cannot afford to lose
• Read the fine print and thoroughly understand the terms of the contract

There are myriad important numbers in your financial world, but few as critical as your credit score. This FICO number, ranging from 0-850, can affect your ability to buy a house or car, get a credit card or other loan, or even get a job sometimes.

FICO scores are based on your credit reports. Credit agencies track credit history and sell it to parties who are interested in your credit-worthiness. Credit reports consist of four elements:

Personal information (compiled from credit applications)
Credit history (details of your credit relationships)
Credit report inquiries (entered anytime someone views your record)
Public records (judgments from government sources, like liens)

Three agencies track credit scores: Equifax, Experian, and TransUnion. You're entitled to a free report once every 12 months; the best place to get this is AnnualCreditReport (www.annualcreditreport.com). You can:

See who's been making inquiries about your credit

Check it for errors

Find out if you're an identity theft victim

Gauge your chances of getting a loan

A bad credit report doesn't have to follow you forever. Even bankruptcies generally drop off after seven years. If your score is less than optimal, you can improve it. Stick with your program and you'll increase your chances of--eventually--getting into that top 5%, or even 1%.

Report mistakes immediately to the appropriate credit agency. Do this in writing, and document it well.

Pay everything on time. Even one late payment on a credit card can lower your credit score.

Budget your credit card payments. They should be as much a part of your budget as your mortgage and food.

Don't let balances on your revolving credit accounts--like credit cards--get too high. Having a high credit debt-credit limit ratio can lower your credit score.

Neither close your unused accounts nor open new accounts to affect your credit score. That trick doesn't always work.

Pay off the cards with the highest interest rate first. No matter what the balance, you should always pay any extra you have on the card that's costing the most. Pay minimums on the rest. When you have that top card paid off, continue the process with the second in line. and so on. Whenever you can, pay more.

Keep an emergency reserve so you can always pay at least minimums on time. Don't be intimidated by this. If you can't save thousands of dollars, at least squirrel away a few hundred earmarked for this occasion. Skip a couple lattes and CDs every paycheck and bank it.

Ask your credit card issuer for a lower rate. This actually works sometimes, so it's worth a try. Credit card interest is simply lost money.

Use your credit cards occasionally and carefully. Show that you can borrow money and pay it back responsibly.

Don't be a deadbeat. The credit bureau can't gauge your ability to pay a debt back if you don't ever borrow any.

Try to maintain a stable job and residence. Lenders are more interested in people who show stability in their personal lives.

Avoid--like the plague--collection agencies and judgments against you. When you've satisfied a lien, be sure to check that the lien has been released and report that to the three reporting agencies if necessary.

What happens if your credit is really in shreds? Double your determination and keep following your program. If you can't get a traditional credit card, get a secured credit card, where you make a cash deposit and can charge up to that limit. Pay it off faithfully, and you'll probably eventually get credit again.

In the meantime, save as much as you can so you don't trash your credit again. Consider asking someone to co-sign a small loan so you can prove you're worthy of credit.

When you are, shop for your credit cards like you shop for groceries and clothing, to find the best deal. Bankrate.com (www.bankrate.com) is a good place to do that. That's a good site for finding the best deals on other financial products, too, like mortgages and other loans.

Improving your credit score will likely take time and some sacrifice on your part. But it's worth it, and it'll save you money eventually -- the higher the FICO score, the better your chance of credit and loans, and the lower your interest rate may be. So keep plugging towards the payoff.

Maintaining good credit allows individuals to take advantage of lower interest rates and rapid access to funds when an appropriate need arises. On the other hand, if you have a less than excellent credit rating, you will pay higher rates and have difficulty obtaining new credit. This can be especially harmful if you wish to buy a home or start a business. The information provided here is to assist in safeguarding and improving your credit.

What Happens When I Default on a Business Loan?

How to Improve Your Credit Score

Solutions for a Personal Credit Crisis

Paying Off Debt the Smart Way