Michael J. Logan, Ltd.

Tips for debt solutions after a job loss

After you lose your job, one of your most pressing concerns may be how to make ends meet. After all, you likely have rent or mortgage payments, car payments, credit card bills and...the list goes on.

It can be overwhelming to think about all the debt you must continue to pay down while reeling from your job loss, so here are a few tips to help.

File for unemployment

In Illinois, you can file for unemployment benefits online. The money you get will not replace your income 100 percent, but it should be a valuable way to help you stay afloat. You must be looking for work to continue receiving unemployment, and leaving your job must have been through no fault of your own.

Tighten your budget (then tighten it again)

The next step is to trim all fat and then some from your budget. For example, you may need to cancel cable TV and Netflix and decrease your cellphone data and minutes. You might also want to walk or bike to places you would otherwise have driven to.

Get in touch with your creditors, such as credit card companies, tell them what has happened, and try to work out a new, if temporary, payment plan. Your credit card issuer should have a hardship program created for people in your situation. (Word of warning: Sometimes, your account may be frozen.) For student loan debt, explore forbearance or deferment options.

For rent or mortgage payments, you might want to consider taking in a renter or doing something such as Airbnb. It is also possible your mortgage lender will be understanding; get in touch as soon as possible, and the lender might let you limit or skip payments for a few months with no penalty.

Borrow money wisely

It can be tempting to dip into, say, your 401(k) account to borrow money to pay bills. However, if you think you might end up filing for bankruptcy, that is money you might be "wasting," as 401(k) funds are generally yours to keep during and after a bankruptcy. Also, a general rule is to avoid new debt accounts if you can (such as making new credit card charges).

 

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