Unemployed and in debt

26 December2009

Debt is not always a bad thing. So long as you can afford all your repayments, and you can see how you`ll repay what you owe, you needn`t face any problems, and your credit rating should be safe from the kind of damage which missing payments can cause.

However, if you become unemployed, your situation can change entirely - and rapidly. Suddenly, you may find that your previously affordable debts have become impossible to repay. If you`re in this situation, it`s essential that you take action as soon as possible.

What should I do if I become unemployed?

If you can`t keep up with your payments, it`s important to pay as much towards your debts as you can afford once your essential commitments have been covered (if this is possible). In some cases, you may be able to ask a partner or other member of your family for support.

Your lenders are obliged to accept any payment you make towards your debts (even if it`s just a `token` payment) but they may decide to take action against you if you don`t stick to your original repayment plan. It`s always best to get in touch with your lenders and tell them your financial situation has got worse - and do it before they contact you to ask you if there`s a problem.

They may agree to an informal arrangement for a temporary reduction in payments or a `repayment holiday`, giving you some time to search for a new job and get your finances back on track (once you have found employment, your lenders will expect you to increase your repayments as soon as possible). Just make sure you understand all about the potential impact of making lower payments or taking a payment holiday.

If you can`t come to any agreements with your lenders, then it`s time to speak with a professional debt adviser and get some advice.

Of course, the information here won`t help everyone. If you simply have no money left to put towards your debts, even after receiving unemployment benefits, then your options may be limited. You may need to consider bankruptcy or a DRO (Debt Relief Order).

For more advice on managing your debts, contact one of our expert debt advisers today on 0800 195 2911.

Tags: debt, manage debt, unemployed, job, lost job, no job, debt problems, money problems

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