Editor's choice: National Debt Relief
- No cancellation fees
- Low minimum to enroll
- No upfront fees
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.
Updated . What changed?
There are steps to take to manage this difficult time including reaching out to debtors to help cover your bills. And if that’s not enough, there may be resources available to help you until you’re back on your feet.
There are a few things you can do if you’ve lost your job, lost hours or were temporarily laid off during the coronavirus. These include:
If you’ve recently lost your job, it’s important to get in control of your financial situation before things start to go downhill. Follow these 9 steps to help keep yourself on stable footing while you hunt for your next job:
If you qualify for unemployment, you should take it. Unemployment can help spare you the financial hardship of being terminated by a company should you qualify for it. You’ve dedicated time to this company and done your job, and it’s why they pay for unemployment insurance in the first place.
If you have savings, now is a good time to rely on your savings accounts and potentially trade in any stocks. Think about the outgoing costs you have and how long your savings will be able to support you so that you can focus on the most important tasks first.
If you have any overdue invoices from past clients, insurance checks that haven’t shown up from a car accident or flood last year or even friends who owe you money, now’s the time to collect. You should also take stock of income-generating assets such as rental properties and figure out what you expect to receive each month.
Also factor in any benefits you can expect to receive in the future. For example, if you’re covered by income protection insurance, you can expect to receive a monthly payment until you’re employed again. Credit card payment insurance will pay up to a percentage of your outstanding balance each month if you lose your job.
Start by looking at your regular and essential costs, such as groceries and utilities, before considering your ongoing debts. When it comes to debt repayments, you can divide them into unsecured and secured loans.
For example, credit cards and personal loans are types of unsecured debt, while a mortgage or car loan is secured debt. Prioritize paying secured debts first, as creditors can reclaim assets secured to a debt if you don’t make your monthly payments. But if it’s possible, you should always aim to pay at least the minimum required on all of your debts.
Work out a budget so you know how long you’ll be able to live on your savings, outstanding payments and any income support payments you receive. Remember, this is your safety net and there’s a chance that you could find employment sooner than expected. A budget can also help you cut unnecessary spending by showing you where the majority of your money goes.
Using your budget, identify which expenses are your “needs” and “wants.” The expenses in your “wants” list can be cut to free up extra cash while you’re looking for more work. Gym memberships and subscription services like Netflix are examples of “wants” and can be canceled or suspended while you’re looking for work. If necessary, you can pay your bills with a credit card to help float your finances.
Reach out to your creditors and service providers and let them know that your employment circumstances have changed. They will most likely offer you a range of options based on your individual situation, such as a payment extension, an extension of the loan term so you have smaller repayments, or a temporary hold on your repayments. You’re much more likely to get a positive response if you’re proactive and ask for help before the debt goes into default.
This could include contacting colleagues and friends to see if they know of any appropriate opportunities you could apply for, updating your resume and connecting with people on services such as LinkedIn. There are also employment agencies and placement services that could help you find secure or temporary employment.
You may also want to get the money coming in again by picking up odd jobs — whatever you have to do to avoid paying bills late and damaging your credit file. Online work is more accessible than ever, and freelance work platforms such as Upwork, Freelancer.com and TaskRabbit are handy when you’re looking to make a couple of extra dollars.
Debt relief is often used as a last resort because the implications can have negative long term effects on your credit score. Forms of debt relief include bankruptcy, debt settlement, and debt management. The main goal of debt relief is to drastically reduce the amount you owe your creditors, or in some cases, such as filing for bankruptcy, wipe the slate completely.
If you’re interested in exploring debt relief options further, make sure to do your own research first before committing to something that may not be right for you.
Before you sign up with a debt relief company
Debt relief companies typically charge a percentage of a customer’s debt or a monthly program fee for their services. And they aren’t always transparent about these costs or drawbacks that can negatively affect your credit score. You might pay other fees for third-party settlement services or setting up new accounts, which can leave you in a worse situation than when you signed up.
Consider alternatives before signing up with a debt relief company:
Requirements for unemployment benefits can vary by state, but if you were transitioned for reasons outside of your control there is a high chance that you qualify for unemployment benefits. The first step in finding out if you meet this criteria is to apply. Unfortunately, many people never reach this step because of preconceived notions regarding their eligibility and feelings about taking money from the government.
Consider the following options if you’ve lost your job and money’s tight:
Avoid using your credit card to pay your bills. Creating new debt to pay an older debt is a slippery slope to financial ruin. Instead, work out a plan with your provider or contact a nonprofit financial adviser to discuss your situation and get specific advice on how to manage your financial commitments.
The exception to this rule is a balance transfer credit card. If you already have debt on several credit cards, a balance transfer card with a 0% introductory rate can help you avoid accruing interest on your current cards while you get back on your feet. This is only a good option if you feel confident that you’ll be able to repay the balance before the introductory period is up.
If you’ve recently lost your job, spend some time taking stock of your situation and planning your next moves so that you can stay in control of the situation. And if you’re having trouble staying on top of your debt while you’re looking for a job, consider enrolling in a debt relief plan to help.
Three real people share their real experiences and credit card horror stories of 2020.
You won’t be able to apply for a new loan unless you’re a returning customer.
Pause repayments, look for low-cost relief to cover expenses and other tips to keep your finances healthy while unemployed.
Compare 6 lenders offering loans that you can qualify for with a credit score under 580.
This debt settlement company doesn’t have many details online, but it’s highly rated.
If you’re concerned your group disability insurance won’t replace enough of your income if you experience a disability, you can buy supplemental disability insurance.
Get your loan payments covered when you experience a disability and can’t work, but with limited coverage.
This debt relief connection service helps you sort through your options — but has had questionable partners.
Debt settlement for payday loans and more — with almost no information available before you sign up.
Witches, warlocks, and werewolves – oh my! 7 scary financial facts and stats to be aware of so you can let the ghoul times roll, minus the debt stress.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.