Debt solutions for the unemployed

May 3, 2017 |

If you have recently lost your job and now bills are piling up with no end in sight it can be a very stressful experience. It would only be natural to try and approach lenders in an effort to secure a consolidation loan to help you over the unemployment hurdle. Perhaps access a little extra money so that you are able to get by while looking for a new job. It may be a rather rude shock to find out that if you are out of a job, despite having a good asset base and very good chances of re-employment no lender is willing to consider your application. Unfortunately until you are in a new job a fresh loan for consolidation or any other purpose is pretty much out of a question. However debt negotiation may be of assistance.

Speak to your credit providers

As soon as you realize that there may be problems with meeting the set payments on your regular bills, it is important to advise the service provider/lender of this. Credit providers are able to offer customers special payment arrangements while they are in the process of looking for a new job. This will relieve some of the financial pressures faced while needing to survive without or on reduced income.

Mortgage providers can actually offer a repayment holiday for a few months. Alternatively they may be prepared to recalculate your mortgage over a longer period of time thereby reducing periodic payments.

The main thing is not to fall into arrears. Your credit history should not be adversely affected if you speak to your lender and come to some payment terms. Simply missing payments will land you in hot water and will make it rather difficult to qualify for any finance int the future.

Early access to superannuation

For those who have let things go to far and are now facing the risk of home repossession, there may be an opportunity to access your superannuation savings in order to catch up on the home loan arrears. This is only worth doing if your situation is otherwise under control. There is little point in taking money for your mortgage from superannuation savings if this is only a short term solution and after a while there will still be a lack of money to cover your mortgage. In the even that the loss of income is permanent, it may be worth thinking about selling your home to repay the lender before it is repossessed.

Debt Reduction

Someone whose income position is unlikely to change in the immediate future needs to seriously consider unsecured debt negotiation with their credit providers. Explain that your income is where it is and why things are not going to improve.  While secured lenders will not want to negotiate debts because they simply do not have to – their loans are secured by your assets and are therefore safe. Unsecured lenders risk loosing everything if you need to declare bankruptcy. They are more likely to agree a reduced payment plan with you in full payment of the outstanding debt.

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