How to Survive Debt After Losing a Job

Being in debt after losing a job is not the end of the world.

Just when you think that you’re doing all right, something happens. You think that you can deal with your debt, maybe you’re already paying it down and improving your credit rating. Then the bottom falls out – the job that pays your debt pays your bills and pays your rent is gone. You don’t need a recession to experience job loss, and even if a business survives the last recession, there is no guarantee that it is going to survive the changing times. There is no such thing as a fail-proof business, just the same as there is no get rich quick scheme. It’s what you do after the rug is out from under you that determines how you’re going to land

First – The Don’ts

For a lot of people, their first reaction after losing a job is to panic. How are you going to meet your minimum payments? How are you even going to eat or pay your bills? Here are just a few of the things that you should not do after losing your job.

• Do not use payday loans.
• Do not live on your credit cards.
• Do not take out a consolidation loan.

These three things will only land you deeper in debt and put you in danger of further defaults. In your panic, it’s very easy to miss the things that you absolutely should do and not think about the alternatives you do have.

The Do List

You might not have much of an emergency fund, but you will urgently need to create an emergency budget. You can carve rental by doing the following:

• Cut out non-essential expenses. Non-essential means that it doesn’t a) keep the utilities on or b) keep the roof overhead or c) keep you fed, or d) keep you alive. Non-essential services include upgraded cable packages, subscriptions to publications, services, or the subscription boxes that have recently became a fad.
• Look for ways to reduce your essential expenses, such as bundling phone and the internet, going to a prepaid cell phone plan, and look for ways to reduce your energy use.
• Take a look at your credit cards and said if it is possible to transfer balances to your lowest interest card. You can also call and ask your card company for a lower interest rate; they will cooperate if you let them know that you are planning a balance transfer to a competitor’s card. You can also ask if they have a hardship plan that will let you suspend a payment or two – however, this may put a freeze on your card.
• While you’re still covered on insurance, take the time to make any doctor’s visits and inform them of your unemployment. Get any procedures done that are pending, and stock up on your prescriptions before your coverage lapses.

Being in debt after losing your job is not the end of the world. You can still get back on your feet, even if it will take a little longer and be a little harder. If you need to determine the best path for paying down your debt, call us for a free consultation in our Fort Lauderdale or West Palm Beach offices. We’re open seven days a week and waiting to help you out.