"What to do When You Are Laid Off and the Bills Just Keep Coming"

RELEASE: October 2001
CONTACT: Paul Richard, ICFE Executive Director

San Diego, CA.  What is worse than losing your job? The bills just keep coming in even after any available unemployment benefits have been exhausted. Money is becoming very tight for an alarmingly high number of American families as the economic downturn accelerated after the September 11th attack on America. That aside, many money shortages among American families, are due in part to poor spending decisions made in the past which has left have little or no savings. Panic oriented, credit based, spending decisions are usually unwise even though they are made under desperate situations.

Dealing with creditors and getting out from under a mountain of debt are two situations many Americans are finding themselves in for the first time. Taking action early and not delaying communications with creditors or others involved is essential for survival and long term financial recovery. Establishing a written plan of action for both household spending and debt reduction is crucial to financial survival and recovery.

Take positive steps in order to reduce the negative impact of adjusting to a lower income life-style. Developing new spending priorities and techniques to make less income go farther is an acquired
skill. Achieving greater value for your spendable dollars, especially in household and grocery spending (because that is where 30 cents of every take-home dollar of income goes) makes coupon and rebate use even more essential than ever.

Working directly with creditors, will help you avoid making the same mistakes again. Letting credit and debt counselors do the work with creditors for you can be less stressful, but it also may be expensive due to fraud and scams. Many so-called debt management agencies are fronts for lawyers who just try to sell people on filing for bankruptcy. If you select a credit counseling agency, make certain they are an accredited, nonprofit agency with a long successful track record of helping consumers.

The three basic ground rules when dealing with creditors are: be honest, be humble and be in touch. Take the first step by contacting all creditors, preferably ahead of time if you know an income reduction is pending. Explain what's happening and lay the groundwork for a temporary reduction of payments. Have your plan ready. Tell how much you can afford to pay and how often you can pay it. Then be ready to negotiate.

Getting out of debt (and rebuilding credit) is a somewhat slower, step by step process. Avoid more borrowing just to pay someone else off. Sometimes a consolidation loan improves cash flow, but ultimately it is added debt and that may have a negative impact on credit files, especially if paying off new charges in addition to a consolidation loan. What your credit files might say about you in future years is your responsibility. Taking positive action with all creditors early usually stops negative reports from being sent to credit reporting agencies.

For information about  monthly budgeting guidelines, and warning labels for your charge cards, visit the ICFE's Web page at: http://www.icfe.info.

If you would like a printed copy, please send $1 to the ICFE and ask for: "Money Helps"
The information packet includes:
1) "15 Tips to improve spending practices";
2) "How to set up and implement a spending-plan";
      (plus a budget worksheet) for personal and/or family finances;
3) "Dealing with creditors";
4) "Steps to take to reduce indebtedness";
5) "How to spend smarter for household and grocery items," and a
6) "Spender's Profile" which helps people identify dangerous spending habits.
 

Money Helps" is available on the Internet free or  by sending send $1 AND a self-addressed, stamped (60 cents) # 10 envelope (SASE) to:

ICFE Money Helps
PO Box 34070
San Diego, CA 92163-4070

http://www.icfe.info/mending_spending/spending_plan.asp

For more information contact Paul Richard ICFE Executive Director at 619-239-1401.