If you are unemployed and in debt, it's best to deal with the problem head on. Ignoring it will only make things worse. Facing the situation may not be as bad as you would think. You may have to adjust your spending habits and temporarily rethink your priorities, but lenders may be surprisingly willing to help.
Pay the Minimum Payment
If at all possible, keep on making at least the minimum payments on your credit cards and other debts. If you pay the minimum on time every month, you will come out of this period of unemployment with your credit record unblemished.
Contact Your Creditors
If you are unable to pay the minimum every month, don't just ignore your bills. Call your creditors and explain that you are unemployed. Many creditors are willing to be flexible and will work with you on payment plans, as long as you have reached out to contact them. The worst thing you can do is to stop paying your bills without saying anything. You may have every intention of paying again as soon as your situation turns around, but your creditors have no way of knowing this unless they hear from you.
Cut Expenses
To free up more money to pay your bills, cut your nonessential expenses. Learn to distinguish between what you really need and what is pleasant, but a luxury. If you are someone who thinks of shopping as a recreational activity, be creative and find other ways to entertain yourself. If you haven't been in a public library in a while, take a look -- you may be surprised at the resources available now. Seek ways to substitute free or cheap alternatives for some of your ongoing expenses. Think of it as a challenge to get back to basics.
Avoid Getting Further Into Debt
If you keep on taking on more debt, you will only make the problem worse. Put away your credit cards -- hide them, if necessary -- so that you won't be tempted to use them to pay for everyday expenses. You may need to use them if you have an emergency, but for routine expenses, try to rely more on budgeting and creative ways of saving to make your money stretch further.
Beware of Scams
You may get phone calls from people claiming they will negotiate with credit card companies to reduce the amount you owe. These are almost always scams. Unfortunately, a lot of con artists prey on people who are in financial distress. To find a legitimate credit counselor, ask for referrals at your bank or credit union, through your school or military base (if either applies to you), or at a consumer protection agency. Check names with the Better Business Bureau and your state Attorney General's office.
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