When people are broke, unemployed, and in debt, the kneejerk reaction is often to ignore the situation and hide from your creditors. But the truth is that hiding from your financial challenges will only make them worse. Instead, you need to take action and follow these steps. This will help minimize the financial fallout so that when you do secure new employment, you’ll be able to recover as quickly as possible.
Assess Your Assets
First consider all assets and possible sources of income available to you. Can you accept part-time work, sell belongings on eBay, or take a local babysitting gig to make a little extra cash for the necessities? This can make it easier to stay afloat and make your minimum monthly payments on-time.
List all of your debts, including the ones you’d like to conveniently forget about.
Make a list of all your debts
List all of your debts, including the ones you’d like to conveniently forget about
- Car loan
- Utility bills
- Store cards
- Credit cards
They’ll all need to be tackled at some stage, so you need to start off with a clear picture of where you stand.
Including the outstanding balances and how much you pay each month.
We suggest creating a survival budget that cuts out all that is unnecessary from your spending until you can get back on the road to financial recovery. With this mode of budgeting your priorities are to take care of your family first and your creditors second.
Unfortunately, this may come down to a few painful choices that include things like surrendering a vehicle to keep your home or working with your mortgage company to relieve a few months of mortgage payments.
Call Your Creditors
If you find yourself with substantial debt and lacking employment you should immediately contact your creditors to make them aware of the situation. Creditors will always appreciate a proactive debtor reaching out to them before they are forced to collect. Contacting a creditor first, will allow you to work out a plan with them on your terms and help alleviate some of the stress involved.
If you plan to contact a creditor without professional assistance then remember to be clear and concise with what you want to have happen. If you approach your creditor in an unprofessional manner then there is little chance they will help you resolve your debt issues. It’s within the creditor’s best interest to talk to you since they will want to get what they are owed in some regard.
Creditors want their money at the end of the day, and they will work with you to reach their goal. Being honest with your creditors will go a long way and might even help you to settle your debts with a resolution that’s favorable to you.
Avoid further debt
Try to avoid taking on more debt while unemployed. For example, try not to make payments using your credit card when you aren’t able to pay the full amount each month. Avoid buying items on pay-later plans.
To avoid debt, adjust your spending to focus on the things you need. This includes your rent or mortgage, heating and electricity, and groceries. Try to make do with the things you already have. Delay buying new things that you don’t really need until you get a new job.