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Unemployed? Tips for Finding Debt Help

Created: On May 5, 2010 @ 4:30 pm In

Anyone carrying significant credit card debt risks financial ruin if they become unemployed because options for managing credit card debt decrease:

  • You can’t qualify for [1] debt consolidation loans without verifiable, sufficient income.
  • You won’t be able to transfer credit card balances to lower cost accounts by opening new accounts the offer lower fees and rates on balance transfers.
  • If you own a home, you may not qualify for home equity financing that can you can use to pay off credit card debt.
  • When creditors learn of your unemployment, they may raise rates, cut credit lines, or close your accounts.

If your current finances are ruined by unemployment or reduced income, you need to assess and revise your debt management plan according to your new situation:

  • Establish how much income and assets you have available to meet monthly expenses.
  • Determine who, how much, and the cost of debt you owe. Make a list of creditors, balances, minimum monthly payments, and the annual percentage rate (APR) for each account.
  • Subtract your monthly expenses from your monthly net income. If you owe more than you can pay each month, contact a non-profit consumer credit counseling service for help.

Credit Counseling Offers Budget Planning and Advice

[2] Consumer credit counseling and debt consolidation plans are developed based on your ability to repay your debts. Your credit counselor works with creditors toward establishing an affordable repayment plan. Here’s how these services typically work:

Initial consultation: You set up an appointment to meet with a credit counselor and bring financial information and information about your debts to your consultation.

Making a debt management plan: Your credit counselor asks questions and evaluates your situation based on your interview and the information you’ve provided. If repaying your debt via a debt management plan is feasible, the [3] credit counseling service contacts your creditors and attempt to reach affordable repayment terms on your behalf.

When you agree to the terms of credit counseling and a debt management plan, you sign an agreement specifying:

  • Effective dates, payment amounts and schedule, and the ending date for debt repayment
  • Costs and fees charged by your credit counseling service
  • Amounts you agree to pay toward your debt management plan
  • Terms, conditions, and requirements of your debt management plan

Your debt management plan includes designing a cash-based budget that eliminates using credit cards for routine household expenses. Your new budget also provides for savings.

Kicking Credit Card Debt to the Curb

Some debt management plans require that you close all of your credit card accounts, others allow you to keep one account open to cover emergencies. Staying focused on eliminating credit card debt requires determination and dedication, but eliminating your credit card debt is a worthy reward.

Article printed from DebtHelp.com Blog: http://www.debthelp.com/blog

URL to article: http://www.debthelp.com/blog/2010/05/05/unemployed-tips-for-finding-debt-help/

URLs in this post:
[1] debt consolidation loans: http://www.debthelp.com/debt-consolidation/loan.html
[2] Consumer credit counseling and debt consolidation: http://www.debthelp.com/debt-consolidation/credit-counseling.html
[3] credit counseling service: http://www.nfcc.org/CreditCounseling/counseling_01.cfm