What Happens to Your Debts If You Lose Your Job?

A few short years ago, much of the world lived a comfortable existence. Nearly everyone had a dependable job on some level or another, and the dependability that the bills would arrive in the mail each month. With a dependable job came the security that those bills could be paid. However, times have changed. The economy has toughened. Large franchises are going bankrupt. Large manufacturers are laying off and shipping the jobs overseas. Traditional job positions are being eliminated and replaced by the heavily trained "jack of all trades". Unemployment benefits and severance packages only last for a short while before leaving the recipients in dire straights. So just what does happen to people's debts once they have become unemployed?

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With some companies, special clauses allowing smaller or deferred payments for those who suddenly find themselves unemployed with little or no income are available. These types of plans are typically available for those who owe on payday advancement loans, some credit card companies, and other companies where larger debts typically occur. It is important to find out right away if your mortgage company, bank, or auto financing institution has such a type of plan. It's best for consumers to be up front and honest with these companies if they do not expect to be receiving any form of income within two months. Some credit and lending companies are happy to work with their customers. Many people find this humiliating, but it's far less humiliating than having the entire neighborhood watch as your car gets repossessed. But those are fixed debts. What about the smaller, shorter term debt?

Other debts will continue to incur and increase for one to three months after their due dates, primarily utilities, until the company has had enough. Gas, water, and electricity are all necessities. Maybe even the very basic local phone service. Once most needed utilities are shut off, it may be nearly impossible to get those services reinstated at a person's home, even in someone else's name, until they have been paid off and a deposit paid. Doing one's best to keep paying the bare minimum to keep them going is vital. For credit card debt, talk to a reputable consolidation agency. Learn about government agencies and civic organization programs that may help you with shelter and utility costs.

Ignoring debt is dangerous and will only lead to more debt. Once a company has filed suit and a judgment awarded, consumers who don't pay could face criminal charges. Jobs may go away, but without paying what's owed, debt never will.

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