Unemployment and Debt

Unemployment and Debt A period of unemployment can often result in a debt problem. If you lose your job and have no savings to fall back on you may need to consider a debt management solution.

  • Options for managing debt if short term unemployed
  • Options for managing debt if long term unemployed
  • Redundancy during an IVA or DMP

Struggling with debt due to unemployment? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts

Managing debt if you are in Short Term Unemployment

If you have recently lost your job but you believe you will be working again shortly you will need to find a short term fix for managing your debt.

In these circumstances you might consider borrowing more to supplement your income. This would protect your credit rating. Alternatively you could use a short term Debt Management Plan.

You also need to consider the implications of getting into a new job relatively quickly but having to accept a reduction in wages. In this situation a more permanent debt solution such as an IVA might be required.

Managing debt if you are in Long Term Unemployment

If you have lost your job and you are concerned that there is no reasonable prospect for you to get back into work any time soon then you need to find a longer term solution to manage your debt.

If you have access to a cash lump sum perhaps in the form of a redundancy payment you may be able to use this to settle the debt you owe. It is possible to do this by negotiating directly with your creditors yourself. Alternatively you culd consider a full and final settlement IVA.

If you have no ongoing income and are unable to raise a cash lump sum an alternative option to consider is Bankruptcy. This may be an ideal solution of you are not a home owner.

Bankruptcy is often considered an option to avoid at all costs. However if you are renting and have no other assets it is very often the best way to resolve your debt problem.

Dealing with Unemployment during an IVA or DMP

If you suffer a period of unemployment while you are already in an IVA (Individual Voluntary Arrangement) or DMP (Debt Management Plan) it is likely that you will no longer be able to maintain your agreed payments.

There are a number of options open to you depending on your circumstances. It might be possible to settle the outstanding debt using redundancy money that you have received. You might also be able to suspend your payments until you get back into work.

If you get another job but on lower wages you may only be able to continue with the agreement you have in place if the payments can be reduced. However you need to understand that the number of payments you have to make will be increased as a result.

If you are made redundant and can no longer make payments inton your IVA or DMP you may need to let the agreement fail and consider a different solution.

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