5 Consecutive Steps To Get Out of Debt When You’re Laid off Due To Corona

Written by: Phil Bradford

“Debts are fun when you are acquiring them,... none are fun when you set about retiring them.” 

Hello friend! The single quote written above may have showcased the current financial picture of America now. If you have lost your job due to the Corona outbreak, you may be one of the 30 million to 40 million Americans who are jobless due to Corona for the first half of 2020.

Experts are even saying the situation in 2020 is far worse than the 2008 recession or the Great Depression of the 1920s. 

If you’re one of the unfortunate persons who have faced a layoff, inevitably you’re in the state of endless thinking and finding no solution now. Your thinking is mainly concentrated on money and debt. You may be thinking how can you get rid of your debt burden without having any job?

Have patience, my friend. This article is written for you. The article intends to help you with some easy solutions to your debt.

You should adopt these 5 approaches to deal with your debt when you’re going through less income or no income state:

1. Write down all your debts 

Prepare a list of all types of debts you’ve now.

Take a look, if you have:

  • Credit card debt/debts
  • Mortgage loan
  • Car loan

You cannot escape from any of these debts forever. So, better have a clear look at your position now. Start checking what is the outstanding balance of each of your debts and what is the monthly payment of each of these debts.

2. Prepare a customized budget ideal for negative financial scenario

The budget may be the most hated word that most of the Americans do not like to abide by. But what to do? When the entire country is going through such a negative financial situation, you have nothing to do but to depend on your budget.

Now, as the situation is not your ordinary situation and Americans may not have faced such a critical situation in over a decade or more. You have to brainstorm new ways to tackle it a little bit differently.

Prepare a tailor-made customized budget that will fit well into your current condition.

The amount you can save after paying off your monthly expenses, like grocery bills and a utility bill, is the amount you have in your hand to repay your debt.

               “ A budget tells us what we can’t afford..”  - William Feather

The Zero-based budget may be the ideal solution for you now. With Zero-based budgeting, for every dollar you spend, you have to show reason to yourself for what purpose you are spending it. The Zero-based budget is your best-customized budget option now to maintain what-is-only-necessary spending and avoid random spending for now. 

Keep faith in Zero-based budgeting, it may come out as your true savior when you are in distress. 

3. Check out the relief options offered by the secured lenders like home loan providers

You can relax my dear friend, for at least some time. The mortgage lenders understand the problem of general Americans that how they will make their mortgage payments on time if they are laid off from their jobs.

The mortgage lenders have decided to reduce or suspend the mortgage payment for upto 12 months.

Other than that you can communicate directly with your mortgage lender and chalk out a payment plan.

Let’s check out what proposals your mortgage lender may offer to you to give you much-needed relief from regular monthly home loan payment.

A. Postponing the monthly mortgage payment: 

According to several financial websites, the mortgage lenders are considering the option of mortgage deferment or postponing the monthly mortgage payment due to the sudden corona outbreak.

In that case, the experts’ suggestion is you must contact your mortgage lender to discuss your situation with the respective bank or mortgage lender.

The banks or mortgage lenders are providing customer care helpline numbers, expert’s help, or providing valuable information regarding mortgage deferment on their website.

B. Mortgage forbearance 

The mortgage forbearance may be the most common measure, the mortgage lenders are offering now to the borrowers.

With the mortgage forbearance scheme, the lenders are offering temporary suspension of payment or reducing the monthly payment of the borrowers. 

 C. Check out the ‘modification of your mortgage’ option 

 If you don’t like either mortgage forbearance or mortgage deferment; the 3rd option available to you is mortgage-modification.

 It means you have to make an application to your mortgage lender that you’re skipping your monthly mortgage payment for some time now and later when the situation will be normal you’ll make the due payment.

Though the loan-term will be extended due to mortgage modification at least you’ll get your much-needed relief for now.

4. Take a look at what credit card firms are offering to you as debt relief options

Similar to the secured lenders, the unsecured lenders like credit card companies too, are taking steps to offer debt relief options to the debtors.

 First of all, you have to formally request them for a debt-related-assistance.

Though different banks have set up different assistance programs. But this article is trying to provide you a picture of the common assistance features.

A. You can have a customized interest rate:

Considering the sudden COVID-19 pandemic and the financial hardship you are facing due to it, many credit card companies are planning to offer a customized or reduced interest rate for a temporary period.

The interest rate will return to its original figure when the economy again turns normal.

B. Lowering or deferring your monthly credit card payment:

You may skip or reduce your monthly payment on the credit card temporarily for now.

When your debt forbearance period will get over you may have to adjust your skipped monthly payment then.

But you can remain assured that no credit lender will force you for monthly payment then.

C. Waiving late fees and making a new payment plan for the remaining balance

Under the financial relief scheme of credit card companies, if you skip your monthly payment, you won’t be charged late fees at least for now.

Discuss quickly with your creditor about what to do with your remaining outstanding balance if you have already paid off a portion of your existing balance.

So, as of now, you are relieved temporarily from any kind of credit card debt payment. 

But at a later time, if you feel you’re being harassed or if you are getting debt collection calls asking for payment, you have the option of taking out expert help on how to deal with collectors and how to get legal protection against the debt collectors.

5. Save the next stimulus check when you get it

The actual ray of hope for you when you have lost your job amid the Corona outbreak is the next round of stimulus check.

The good news is the $3 trillion HEROES or Health and Economic Recovery Omnibus Emergency Solutions is passed in the Democrat-led House.

Under the stimulus package, each member of your family including your children is entitled to get $1200 as government aid.

You can hope everything will be alright and you will receive the payment that you need now the most.

Try to save the money as per as you can because when the debt payment will start again, your saved money will provide you some sort of relief for sure.

For now, adopt these 5 steps you can at least survive the financial hardship for now.

“There’s a great big beautiful tomorrow, shining at the end of every day.”

Final words

Most of the households have been hit by the pandemic. The survey from Betterment has revealed 54% of Americans are in a financial crunch now affected by job loss or other reasons. You can only hope that the current situation will progress better and you can sustain yourself through the debt problem, job loss, etc.

Related: News of US Housing-Market After 6 Months of Corona-Hit 2020

Author Bio: Phil Bradford is a financial content writer and an enthusiast. He has expert knowledge about personal finance issues. His passion for helping people who are stuck in financial problems has earned him recognition and honor in the industry. Besides writing, he loves to travel and read books.