debt

Coping with debt when you're laid off

Credit policy
Just as with the mortgage, consumers can call their credit card issuer if they can't pay minimums.

But, here too, there's no guarantee that card issuers will acquiesce and lessen your load.

Jobless workers who need help until they land another position are distinct from borrowers who've overextended themselves and have sky-high credit card tabs. Ask for a "hardship" program, where your payments are temporarily reduced or suspended, says Detweiler.

But be advised: Credit issuers may see you as riskier, and lower your credit limits.

Third party?
Especially when households hold multiple credit card accounts, handing over the negotiating to a nonprofit credit counseling agency can be easier.

Since counseling is now required before anyone declares bankruptcy, the U.S. Justice Department's Web site lists reputable agencies, which charge a minimal fee.

Rhode, however, worries that a credit counselor could create a budget too heavy on credit card payments, and "that wouldn't be sustainable if you have a long job loss."

Many credit counseling firms are geared to negotiating for overextended borrowers, not jobless workers, says Detweiler. "It's up to you to make sure your priority bills are paid first. If they set up a budget that seems too high, you shouldn't do it."

Strong negotiating stance
When you have ample reserves to pay credit card bills, call creditors, but not to explain your layoff, says Detweiler.

"Say another card company is offering you a better rate, and you will transfer unless they give you a break."

But creditors typically agree to cut rates only about half the time, says Detweiler.

Still, this approach gives you the strong negotiating position, and card issuers won't cut your credit limit as they might when you call for forbearance because you can't make the minimums.

School rules
For parents who hold federally backed PLUS loans taken to pay for their child's college, or young adults paying back federal Stafford loans, getting a reprieve on this obligation may prove relatively easy. "There's a policy (for jobless borrowers) on these federal loans, which are the most common (college loans)," says Kal Chany, author of "Paying for College Without Going Broke."

Here, calling before payments are missed -- and your credit takes a hit -- is a no-lose proposition, says Chany.

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