Losing your job is never easy. With the mass layoffs being meted out by companies each day, however, it is no longer a rarity. The emotional and mental stress is only the beginning, as loss of a job automatically triggers off a number of financial issues, like debts. Though your cash flow might have reduced to a standstill, the debts aren’t going anywhere. Not only do you have to put food on the table, but also find a way to tackle and pay off the minimum monthly payments to your creditors. Debt settlement has always been an option, but before you resort to that, you must analyze your situation.
Are Minimum Payments Still Payable?
A clear understanding of your financial situation is important. With the present state of your accounts, combined with unemployment benefits and any nest egg you had kept aside, will you be able to pay off the minimum payments for your debts? If so, then you would need to keep doing that while searching for a job. Your creditors will be satisfied as long as you can keep paying them.
Smart Budgeting is Key
You must prepare a detailed list of your expected expenditure, and then prepare columns like “wants” and “needs”. You will need to slash all of your spending to the bare minimum so that most of your income can be used to keep your debt situation at bay. If you manage to pull this off, you may not even need to resort to consumer debt settlement. You could get a new job soon, and then return to your normal course of life.
Can’t Keep Up?
So you’ve prepared a list. So you’ve tried your best to reduce your expenses, but your credit situation does not permit you to meet the minimum payments for your debts after catering to your family needs? In this case, you have three options.
Secure a Loan
The first, consolidate these debts into a loan with a low interest rate. Unfortunately, it is near impossible for an unemployed person to secure a loan, as a lender or bank would like to see employment records so that they get assured reimbursement.
The second option for you is declaration of bankruptcy. This is not the most favorable thing to do, as it has adverse and long-lasting effects on your credit score. However, it is a good last resort, as it will take care of most of your debts. New legislation has unfortunately made it even more difficult for consumers to file for and attain Chapter 7 bankruptcy.
Resort to Debt Settlement
The last option is debt settlement. This involves paying off the debts in a lump-sum form in exchange of a portion of the load being struck off by the creditor. Because the creditor loses money in such a scenario, most firms don’t agree to debt settlement terms unless they see the subject is a few months behind on their payments, and understand that their situation isn’t getting much better. In this situation, most would like to get paid rather than wait for the full period and not receive their dues. Hence, it only makes sense to resort to debt settlement if you are struggling against debt.
The last thing you have to keep in mind is that for you to avail debt settlement as an option, a large chunk of money is needed. You must, however, keep enough money stored away, and not try to drain all your reserves to pay off all the debt at once. Many creditors are willing to give you a few months to collect the required funds. It is advisable to contact a financial planner, browse through debt settlement reviews or contact a debt settlement company to assist you.