Sometimes life throws us a curve ball and we find ourselves without work. All sorts of things could happen that might cause someone to become unemployed and with a pile of unpaid bills—for an extended period of time. A debt settlement company can help you regain financial stability.
Whether it’s an injury that’s left you incapable of working or a natural disaster that destroyed your place of employment, the stress of losing your main source of income makes the situation far worse.
Many folks immediately think of the impact losing their job will have on their credit score. And thoughts of losing things like your car or your home might also be weighing heavily on your mind.
To help you take control of the situation and come out on top, we’re going to cover some debt management and budgeting tips to tackle your long-term unemployment.
Budgeting Tips for When You’re Unemployed
If you’ve recently found yourself unemployed, you’re probably concerned about managing your finances to make your savings last as long as possible.
Thankfully, there are numerous methods for reducing your monthly payments, late fees, and interest charges.
Get a Lower Interest Rate
One of the first steps to take if you go on long-term unemployment is to get your interest rates reduced on the debt you already have. Typically, this will be credit card debt but sometimes could include student loans.
Often, credit card companies have introductory low rates for balance transfers. This could save you hundreds or even thousands of dollars each month on interest charges. You can also try calling your creditors to ask for lower rates so you can keep up your minimum monthly payments—until you’re earning money again.
Get a Forbearance on Federal Student Loans
If you have student loan debt, you might be able to get a forbearance from the lender. With patience, you won’t have to make a monthly payment for a predetermined amount of time.
You might even be able to extend this forbearance if your employment situation is still unresolved when the first one ends. The one major downside is that you’ll still be charged interest on the debt, inflating the balances for even more time owing the debt.
Prioritize Secured Debts Over Unsecured Debts
Keeping your possessions is always on the mind of anyone who’s just lost their job. To give yourself the best chance of keeping everything you own, a rule of thumb is prioritizing secured debt over unsecured one.
That’s because secured debts like auto and home loans are backed up by these assets, allowing the lenders to come to take the property to try to recoup the debt. The good news is, that items purchased using unsecured debt or credit cards, don’t have the same risks. So, always pay those secured debts.
Getting Help from a Debt Settlement Company
Unemployment sometimes drags on far past the point that we’re able to hold on financially. In these circumstances, it might be helpful to get the assistance of a professional. Credit counseling is one option for those that haven’t fallen too far behind.
But for those with debt collectors calling constantly and credit card debt that simply can’t be paid, working with a debt settlement company could be your best option. However, debt consolidation loans might offer an alternative, which is similar in nature. Which route is better?
Is Debt Consolidation or Debt Settlement Better?
What are the differences between debt consolidation and debt settlement? Understanding this will make choosing the best option for your financial well-being easier.
How a Debt Settlement Program Works
The debt settlement process can be complicated. Debt settlement companies are professional negotiators who deal with creditors every day. These experts have deep experience in dealing with a wide range of creditors, giving them insight into how to best approach each.
Debt settlement companies reach out to creditors on your behalf to get you debt relief by negotiating reduced late fees and slashing the principal balance owed in return for a lump sum payment.
This payment is made from a dedicated bank account used to build up funds. The savings account is one key difference between a debt settlement and a debt consolidation loan.
How a Debt Consolidation Loan Works
Debt consolidation loans are a little more basic in how they work compared with debt settlement. Sometimes it’s possible to simply pay off your unsettled debts with debt collection agencies by taking out one loan for everything.
Depending on the financial institution, you might need a good credit score for the rates that will save you the most money. Because of this, debt settlement programs are usually the better option when your income and or credit score is insufficient for a loan.
Alternatives to Debt Settlement
Credit Counseling
A nonprofit credit counseling agency could be an alternative to debt settlement if you’re unemployed. Depending on how long you will be without income, your savings, credit report, and the amount of personal credit card debt, credit counseling could help you hold on to your financial status for longer.
Bankruptcy Attorney
One final alternative if your taxable income has been drastically reduced due to job loss is bankruptcy. Depending on the type of bankruptcy, forgiven debt might never have to be repaid. These bankruptcies are usually for those who have no chance of repaying their debt or working with credit counselors.
Choosing the Right Debt Settlement Companies
A good debt settlement company will work tirelessly to get the best debt management program for you when you’ve lost your job. These experts understand the debt collection laws and how to get the best deal with a debt collector.
The best debt settlement companies understand that borrowing money or getting personal loans isn’t an option for you and that getting your debt settled is the top priority. They’ll also stop debt collection calls from a creditor or debt collector as part of the debt settlement agreement.
When you first talk to a debt relief company, learning how they charge for debt settlement services is key. The debt management plan shouldn’t require big upfront payments, a common debt settlement scam. A reputable debt settlement service will focus instead on the debt settlement effect on your life, working to minimize the debt settlement risks for the best results.
Get started today by reaching out to Alleviate Financial, a leader in the debt settlement industry that’s known for debt management plans that transform lives for the better. Contact us at 877-879-4905 at Alleviate Financial Solutions today!
