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Facing a Financial Crisis

Blog: Financial Advice
Posted by: jackspar07 Sunday 11th January 2009, 5:06am

Are you living paycheck to paycheck? Unemployed? Unable to pay your medical bills? When you are faced with a financial crisis, the first step is to evaluate your situation and consider all the options. Written by financial experts, this crisis guide

most common types of financial crises:

• Unable to pay small bills – If you are unable to pay small bills such as utilities and credit cards, contact the businesses directly to see if you can work out an agreement. In the case of a utility bill, it may be okay to skip a payment in a crisis. Utility bills do not report to the credit bureaus and they only charge a small late fee. It is not usually a good idea to use a payday lender to pay these small bills. Instead, see if you can negotiate to pay in a few weeks or borrow from a family member.
• Unable to pay large bills – In the event that you cannot pay your mortgage or loan payment, contact the lender immediately. Most lenders have forbearance and modification programs set up to help borrowers who are dealing with a temporary financial crisis. You should make every effort to pay a mortgage or loan payment on time during a financial crisis. Not paying on time can result in damage to your credit report and possible foreclosure of the vehicle or property. Consider using savings, borrowing from a family member, or reducing your expenses in order to pay your loans. If the problem continues, you may want to contact a HUD-approved housing counselor for assistance.
• Deep in credit card debt – If you have a steady income but are facing a large amount of credit card debt, you should develop a plan for paying off the debt over time. Calculate exactly how much you can afford to pay toward your debts each month. Subtract all your minimum payments from this amount and put the rest towards the debt with the highest interest rate and the highest balance. This is the fastest way to reduce your debts. Do not charge additional expenses to your credit cards during this process. You can read more about debt management ideas online.

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