Losing a job is one of the worst experiences anyone can ever face, especially if it was well-paying and comfortable. And losing one while in debts can make things more complicated. The team at Lendgreen however offer you the needed advice and guidance on how to deal with your loans and debts as you look for employment. This is the time you realize that all of your debt-busting goals are about to head to the trash and you’re not even sure how you are going to meet your minimum payments on time. This is the time you find yourself stuck in a debt trap after getting fired from job.
Here are some common debt traps that you may end up facing:
- Payday loans
- Debt consolidation or settlement
- Using your credit cards like loans
You need to try and avoid all of these options best way you can. This article highlights some of the options you can opt for to try to avoid getting caught in a debt trap.
- Check whether you qualify for unemployment
This usually depends on how you lost your previous job. If what caused you to lose your job was not as a result of your own doing, then you might qualify for unemployment benefits. But if you lost your job as a result of fraud or any other malpractice, then count this option out.
- Create an emergency budget
It is crucial that you start learning how to cut back on some of your expenses since you now have no source of income. The best way you can do this is by creating an emergency budget.
If you were smart enough to create an emergency fund before you lost your job, then you will have somewhere to fall back on for the time being. But you need to know that the emergency fund will be mostly for funding your essentials and not your lifestyle.
Take the following steps:
- Cut all the non-essential expenses
- Re-evaluate your debt goals
- Look for how you can cut your fixed expenses
- Be frugal with your variable expenses
This should keep you going at least until you get another source of income.
- Adjust debt payments
When you re-evaluate your financial goals, you will also need to adjust your usual debt payments since you will no longer be paying your debts in the same frequency as you were when you were employed. In as much as you want to get done with your debt situation, you will have to cut back for the time being until you get a steady job.
- Take advantage of the hardship plans
You should inquire how your credit companies will report enrollment in any of the hardship program plans available to the credit bureaus as this can sometimes affect your current credit scores. It will also a good way of having emergencies that need emergency money.
Other programs can freeze your card. This freeze is always permanent, but there are times when it can be temporary. If, however, you don’t qualify for any of the programs, then try to at least negotiate a better interest rate arrangement with your credit card company.
If your lost job interferes with how you usually pay your mortgage, then you can try these options:
- Modify or refinance your current mortgage loan
- A new repayment loan
- Rent out your current home
- Try out government assistance programs
You should also try out the debt-related assistance programs available. They may include the following:
- Student loan discharge programs
- Deferments programs
- Income-based repayment programs
- Home affordable modification programs
There is also government assistance for child care, food, etc. that you can also look into.Back to top