Managing debt on an unsteady income

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Dear Debt Adviser,
I have approximately $17,000 in unsecured debt. I lost my job three years ago, and have been able to (somehow) pay at least the minimum due on all of my debt. I took a position last year that pays about one-half of my prior income. I am budgeted as tightly as I can possibly be. With the upcoming slow season looming, I will be dealing with cut hours and such an unpredictable schedule a second job doesn’t seem possible (so far). I am unclear on what steps to take. Bankruptcy doesn’t appeal to me (I’m over 55), and I have a distrust of “debt miracle workers.”
— Gina

Dear Gina,
I think you deserve an award for handling a difficult situation well. I’m glad that you were able to make the necessary adjustments to stay afloat.

I completely understand your distrust of “debt miracle workers.” You obviously have a firm grasp on the knowledge that if it sounds too good to be true, it is. There are no miracles to be had in handling debts, although there’s no shortage of people who will try to scam you into thinking there are.

Debt Adviser’s quick tips
  • Ask for a hardship plan.
  • Look for part-time work.
  • Reopen a full-time job search.

If you believe that during the upcoming slow season for your employment income that you will be unable to make even the minimum payments due, I suggest you contact your creditors and let them know what you are up against. Ask to speak to a supervisor and explain your income loss and cyclical job. Request a hardship program for the short time that you will be unable to meet the current minimum payments. Be sure to have a number you can afford to pay in hand before you call. Otherwise, they will suggest one and it may not be what you need to make ends meet. Most creditors have hardship programs that will lower your payment for six months or so, and that may be a perfect fit for what you need.

Should some of your creditors be unwilling to work with you or if you are uncomfortable communicating with them on your own, you might consider contacting a nonprofit credit counseling agency. If you believe you can make the approximately $340 minimum payment that you owe each month on your $17,000 unsecured debt, a debt management plan, or DMP, may help you. For a small monthly fee, you can enroll in a DMP that may reduce your payments and lower your interest rates so you will be able to repay your debt in five years or less. With a DMP you can also make additional payments to your creditors to pay off your debt faster if, and it is hoped when, your financial circumstances improve. You can find a good counseling agency at the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

I want to encourage you to try two courses of action in addition to my suggestion above. Keep trying to work out a second job opportunity to ease your financial situation. By the time you find something, your schedule may be more settled. Think of it sort of like going long for a pass in football. You can start hustling now and hope the ball will be downfield for you to catch when you get there.

Also, I’d like you to consider reopening your job search. You’ve been in your job a year, and a lot has changed in the job market since then. It’s still not good, but it may be better in your area or field than it was when the economy was in even worse shape and much less certain. Plus, you have a big advantage now. You have a job! Nothing is harder than getting a job when you haven’t got one. You are a much more desirable candidate with a job, so update your resume and try some networking to see if you can get that lost income restored.

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