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When you lose your job, unfortunately you don’t lose the bills that come in each month along with it. Unemployment is a very real and unfortunate aspect of life for many, affecting millions of Americans at any given time, creating uncertainty along with the increased likelihood of debt.
Fortunately, there are some debt management techniques that can help you survive these tough times. Here are five debt management ideas for when you lose your job.
1. Restructure your budget
Most financial professionals recommend having an emergency budget that covers at least three months of your bills. If you find yourself in an unemployment situation hopefully you have some type of savings that you can use to cushion the impact of the new financial strain.
Regardless of whether or not you have an emergency fund, you should put yourself on a financial diet. This sees that you eliminate any unnecessary expenses and reduce all of your costs as much as possible so that you can dedicate your funds to items that you absolutely need (food, shelter, etc.).
2. Look into job-loss protection insurance
Many mortgage and credit card companies offer what is called “job-loss insurance” which sees that the insurance company (temporarily) pays off your mortgage or credit cards debts should you lose your job. Some mortgage companies even provide the service free of charge so if you are a homeowner that has recently lost your job you may want to check with them to see if you are covered. There may be some small print associated with these programs – ex. your benefit may be taxable – so make sure you read through the terms before signing up and weighing your other options.
3. Call finance companies to see about deferring payments
If you can negotiate deferred payments with your creditors this may be a great option that alleviates some of the stress of unemployment and allows you to concentrate on looking for a new job. Some financial institutions will work with you while others may not. If they won’t grant you additional time to make payments, explore additional options (as addressed in number four below).
4. Contact all creditors to see what your options are
As soon as you lose your job and forecast your inability to meet your financial obligations you should contact your creditors to make them aware. You may be able to defer payments (as mentioned above) or at least negotiate reduced interest charges.
Mortgage lenders, in particular, will want to avoid the time, money and effort required to file a foreclosure and may be able to work with you to renegotiate your mortgage (called a mortgage modification) to make the payments more affordable. Your auto lender, credit card institutions, and even your government-related student loan creditors may also provide options that help you get on a more appealing financial track.
5. Try to get assistance from the government as soon as possible
There are a number of public assistance programs that you may qualify for to help you with your unemployment situation. In fact, the federal government has over 1,000 benefits programs which include:
The U.S. Department of Health and Human Services (HHS): Provides access to more than 300 grant programs that may help with health-related services such as medical costs and hospital bills.
- The Low Income Home Energy Assistance Program (LIHEAP): Provides assistance for energy-related bills such as utilities and heating.
- The Supplemental Nutrition Assistance Program (SNAP): Provides assistance to families who struggle to afford food.
Other unemployment options to consider
Non-profit debt consolidation counseling can see that professionals negotiate on your behalf so that you can reduce your total interest payments or review better terms with your creditors. If you have a retirement account in place, such as an IRA or 401(k), you may be able to access these funds (although penalties will apply for withdrawing them before a given date) to help you stay afloat. Finally, and as a last resort, consulting with a bankruptcy attorney may be the only option that you have left on the table.
Author Byline:
DebtHelper.com is an IRS Approved 501c3 Non-Profit Florida Corporation dedicated to our mission to educate, advise and empower youth to seniors to handle debt, credit and housing and to provide affordable housing opportunities through the acquisition and rehabilitation of residential properties.
Other unemployment options to consider
Non-profit debt consolidation counseling can see that professionals negotiate on your behalf so that you can reduce your total interest payments or review better terms with your creditors. If you have a retirement account in place, such as an IRA or 401(k), you may be able to access these funds (although penalties will apply for withdrawing them before a given date) to help you stay afloat. Finally, and as a last resort, consulting with a bankruptcy attorney may be the only option that you have left on the table.
Author Byline:
DebtHelper.com is an IRS Approved 501c3 Non-Profit Florida Corporation dedicated to our mission to educate, advise and empower youth to seniors to handle debt, credit and housing and to provide affordable housing opportunities through the acquisition and rehabilitation of residential properties.
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