What do you do if you lose your job?

When you take out a loan, you usually expect to be working enough to pay it back.

This is especially true with a secured loan, because you obviously know that you need to make the payments or you lose your home, so you assume that when you take out a secured loan you must be expecting to be receiving a monthly income that is going to be able to cover the payments of the loan.
But if you lose your job , this can put your world in a lot of peril. Without streaming income, it is hard to pay for food let alone loan payments, so it is understandable that if you lose your job you may have problems making loan payments.

 

What Should You Do?
The first thing you should do is contact your lender. Lenders know that sometimes people lose their job - it is the nature of their business - and trustworthy companies do not want you to default because it means they do not collect their money.

As such, there are a number of options that you and your lender can work out that may allow you to not have many financial struggles due to losing your job.
These are known as:

• Forbearance
• Deferment

Deferment is the ability to postpone payments. You contact the lender, the lender allows you to go into deferment (meaning that for a pre-specified period of time you do not need to make a payment) and you have some period of time in order to find a job and find income in order to start paying back your loans.

The other option is similar. It is known as forbearance, and it is essentially the same thing as deferment but you are going to still be charged interest while your loan is being deferred. Forbearance is a much more common option to find these days because it makes the lending companies more money, and although you probably would prefer not to have to pay extra interests over this period of time, it is still a far better option than defaulting on the loan.

Lending agencies know that it makes no sense for them to try to charge a lot of money to someone that has admitted to them that they have no money. It just makes them far less likely to make payments, which means less money for the lending agency. That means that most lending companies have an option on hand (either forbearance or deferment) that will allow you to wait until you find a new job before you have to start paying your loan back again.

There are two things this means, however:

1) You need to contact your lending company the instant you lose your job in order to start working out the details right away.
2) You need to find a job - if you are getting close to the end of your forbearance or deferment period, then you may need to take a small financial hit and find a job that pays much less than you were previously making. But the banks will not defer payments forever, and if it seems like you are never going to find a job (because you are not willing to accept a lower paying jobs) then banks may assume you are not going to pay them back and will assume that you are defaulting, and they will start to take action.

 





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