When Financial Hardship Strikes

: Chris Lee Law Firm

  Filed under: Money Management

financial hardshipGone are times in which we can rely on external stability or hope we have the ability to ride out a financial storm. These days you have to have a hefty savings or financial disaster plan just in case the economy or job market forces you into financial hardship. For many families, this is a devastating time and getting behind on your debt payments is just the tip of the iceberg. Harassing creditors, foreclosure notifications and an unforeseen future can wreak havoc on a once stable family’s life.

Preparing For The Worst

Just like mom always said, “save it for a rainy day”. This is true now more than ever before. Nearly two thirds of Americans are in moderate to severe debt and nearly one-third have been, or will be, in default of those debts. So what can we do?

If you are still managing your debts and earning an adequate income, consider yourself one of the lucky ones. However, now is the time to take action to prevent the potential for disaster. Develop a savings plan to boost your savings and put away money in the event you lose your job or take a pay cut. It is recommended that every family have enough savings to cover at least 3 to 6 months worth of essential living expenses like a mortgage, car, gas, food and utilities.

If you have yet to hit financial hardship but are seeing your debts pile up, you are at a crucial crossroads in your financial life. Begin a plan to lower your debts and eliminate some of those monthly credit payments. You can attack your debts one at a time or begin paying more than minimum payments on multiple accounts to lower your monthly payments. In any case, the goal for you is to free up as much income as possible from your old debts to become a part of a prioritized savings plan.

If you are in financial trouble and have, or think you might, miss a payment, you must contact your creditors right away. This is especially true of mortgage debts. Contact your lender to negotiate a loan modification or other debt relief option to gain control before your home is at risk of foreclosure. Credit negotiations can also help relieve your credit card debts and lower payments quickly before you lose control or end up in bankruptcy.

 


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