Managing Loans After Job Loss
With experts predicting an economic recession to occur sometime this year, many large employers have started the new year with large-scale layoffs. Small businesses are also having to cut back on payroll to survive a lower-profit holiday season. This means tens of thousands of workers are currently unemployed, with more job losses on the horizon. With this climate, there are also unforeseen events that can render you unable to work, like accidents or illness.
If you experience job loss, what would that mean if you had monthly personal loan payments? The following are things you can do to manage debt payments during a period of unemployment.
• Continue to make the minimum payments to keep your account in good standing and avoid late fees or increased interest.
• Contact your lender and discuss your options. A lender may agree to reduce your payment or your interest rate, postpone or delay a payment, or allow you to settle the balance for less than you owe.
• Be proactive and forthright with creditors. It’s better to be upfront rather than fall behind and risk your credit score.
• Instead of missing a payment, try paying a portion when you can and the remaining balance within 30 days of the due date.
• Do not take on any more debt during this time, particularly variable-rate credit cards.
• Consider debt consolidation if you have high-interest balances. A low, fixed-rate loan could have more manageable payments.
Credit insurance products are also an option to help ease the burden of an unexpected job loss. This protection is typically offered by the lender at loan closing. It is completely voluntary but can help borrowers meet payment obligations during difficult circumstances. Credit protection products may keep you from becoming delinquent on your loans — by paying, canceling or waiving what you owe. Lendmark Financial offers loan customers credit insurance options through Securian Financial; just ask your loan advisor about coverage and benefit details.