What to do when being unemployed and in debt
Asking for help at a professional debt counsellor can be helpful
A credit is nothing unusual anymore. Almost everybody had to take up a loan at some point. But what if somebody has still outstanding debts when he gets the sack by his employer? In cases like these, it is not easy to repay any outstanding credits as previously agreed upon with the bank. Other debts like unpaid bills or from goods that were purchased on a deferred payment basis are similar, it is much harder to pay them when suddenly being unemployed. But how can you get rid of your debts without taking out yet another loan?
It is very unlikely to get a loan as an unemployed person anyway. If somebody has applied for a residual debt insurance that pays for the credit in case that he becomes unemployed, he only has to pay two or three more instalments. Afterwards, the insurance starts to pay, but this is usually limited to a maximum of one year. Until then, the debtor should have found a new job in order to earn enough money to repay the outstanding loan by himself. Ideally, it has already been paid for during the time of unemployment so that he can start his new job without already being in debt. If there is no residual debt insurance for the time of unemployment, one should consult with the bank or the institution that has issued the credit as soon as possible. That way, it is possible that both parties agree on lower monthly instalments so that the credit can be repaid, albeit slower as planned. If the debtor speaks to the creditor early on, the institution issuing the loan is usually willing to agree on new conditions. For other debts like unpaid bills, one should also talk to the creditor and as for the possibility of paying the amount in instalments. Usually, these creditors will agree as they are getting their money finally. Moreover, it makes sense for them as it is unlikely for them to get any money if the debtor files personal bankruptcy. Therefore, one should try to talk to one´s creditors to find a mutual agreement such as low monthly instalments or a settlement that is favourable for both sides. This could mean paying a lower amount of money than what was initially owed, thereby becoming debt-free. Overall, talking to one´s creditors is definitely better than not talking about one´s problems at all. In that case, creditors will have to take action and try to get their money back. This could well mean that filing for personal bankruptcy is the only possible way out.
