Handling Your Credit Card Debt During Unemployment
Are you facing unemployment and have a large amount of credit card debt ?
Below are a few tips on how you should tackle credit card debt when you’re facing unemployment:
Build up Your Emergency Fund
Many debtors facing imminent unemployment use the income in the months preceding their layoff to pay off credit card balances, this is a huge mistake. Don’t waste your money by paying down credit card balances when you know that you’re going to be unemployed. Make sure that you place as much income as possible into an emergency fund so that you can have cash for the essentials and any small crisis that pops up.
Decrease as Many Expenses as Possible
Consider cutting out cable TV, extra phone services, internet service you may not need, take-out meals and any other expenses that could be hurting your budget. If you’re renting and your lease is expiring soon, consider moving to a cheaper place. All of this should be done as soon as you realize that you are facing unemployment. Don’t wait until after you are laid off to cut back on expenses, do it now.
Make an Honest Assessment of Your Finances
Will you have a severance package, unemployment insurance, or other income? How much income will you have? Were you struggling when you were fully employed? If you were struggling when you were fully employed then you may want to seriously consider bankruptcy right after becoming unemployed. And if you find that you are still unemployed 6 or 12 months after you were laid off you may want to explore your bankruptcy options.