Hard times have hit upon everyone since the financial crisis. If you have suffered the severe setback of losing a steady income, you need to take stock of your financial position and look for ways to get out of your problems.
You are probably wondering how you are going to meet your credit card and mortgage payments till you find a new job or another source of income. You may have savings but they will only suffice for a year at the most. The cost of living remains more or less the same and the prices of many products have even risen. You need a plan to manage your money and safely get past these expenses.
Debt relief
Debt settlement and debt consolidation are two effective ways for reducing your liability. If you can manage a fixed monthly payment, opt for debt consolidation. Consolidating your credit card or personal loan under a single loan will give you some respite from multiple monthly payments. But make sure you can afford the payments on the new loan.
There are many debt consolidation companies that offer reasonable lending terms and consolidation plans. You can check with your local bank as it may offer you better terms if you maintain a savings account there.
If your debt account has reached the collections department, you need to look for a quick solution to meet the minimum payments. Search for a reputed debt settlement company. They are usually able to negotiate a settlement amount with the creditors. This settlement amount is normally a sum less than the total outstanding debt. Through hard negotiations, debt settlement companies can reduce your debt to anywhere between 40%-60% of the original amount.
Second mortgage
If you have an existing mortgage on your home, you can take out a second mortgage against the equity that you still own. You can use the cash to pay off your debts. Ask your current lender if he is ready to offer a second mortgage as he already holds a lien through the first mortgage and will have all your documentation. However, this type of mortgage normally carries a higher interest rate so you need to assess whether you will be able to afford the payments.
Remember that your loss of income is only a temporary setback. Once you have a regular job, you will have a steady source of income and can meet your financial obligations. For the time being, you need to use any measures possible to save yourself from sinking further into debt.
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