Life happens. Your car breaks down. Prices go up. The latest layoffs come, and you find yourself out of a job.

Facing financial difficulties can be stressful. Whether you’re going through tough economic times or facing other roadblocks to your debt repayment, a financial setback can make you feel like you’ll never be able to pay off your debt.

Even with financial difficulties, you don’t have to give up on paying off your balance. By taking the right steps, aligning your resources and managing your finances, you can still pay off your debt when facing a major setback.

Facing a financial setback when you’re in debt

Different financial setbacks can impact your debt repayment plans in a few ways. While it can be difficult to prepare for every possible scenario, having an idea of these potential setbacks can allow you to manage the situation.

Emergency expenses

Emergency expenses, such as a medical bill, a needed home repair or car issues, can easily throw you off your financial game.

According to a survey by Bankrate, 44 percent of adults in the United States wouldn’t be able to pay for a $1,000 emergency expense from their savings. Over one in three (35 percent) would take on debt to pay that expense.

Draining your savings, taking on more debt or being unable to pay your monthly bills due to an emergency expense can be a frustrating experience. An emergency fund can give you a buffer in circumstances like these.

If you don’t have one in place, or if it isn’t enough to pay for the expense, you may need to rearrange your budget or make some additional payments to pay off the extra debt

Increased expenses

Seeing your expenses outpace your budget can throw off how much money you have available for debt repayment.

Unfortunately, it’s not unusual to see your bills increase even as you pay down debt. Inflation is keeping prices for essentials such as groceries, gas and services higher than most Americans would like, squeezing budgets across the board.

Increases in insurance premiums and taxes can take more of your income. If you have an adjustable-rate loan, increases in interest can mean your minimum loan payments rise from month to month.

Larger-than-expected expenses are never great to see on your monthly budget. It’s a good idea to have some wiggle room in your projected expenses in case prices increase. Higher prices may also mean you have to cut certain expenses, adjust your budget to make your loan payments or see if you can supplement your income.

Additional debt

While you generally want to pay off your old debt before taking on a new balance, you may need a loan to pay for an unexpected expense. For example, you may need to use a credit card to pay for an emergency or get an auto loan to pay for a new car.

When taking on new debt, you’ll need to adjust for a larger or additional debt payment each month. Rebalancing your budget or seeing how you can supplement your income with a side gig can help you make payments.

Job/Income loss

Losing your job or seeing a dip in your income can make paying off your debt more difficult, especially when you have other expenses to prioritize. While essentials such as housing costs, utilities and groceries take priority, your debt payments should still be at the top of the list. Otherwise, you may have late fees and a possible hit to your credit score.

If you have an emergency fund, now is a good time to use it to pay for your most essential expenses. Cut out any non-essentials (within reason) and see where you can bring in another source of income through other employment. Unemployment payments can also help.

The steps to take when you’re facing a major financial setback

No matter your situation, it’s important to be thorough and mindful when handling a financial setback when you’re in debt. Though the situation may feel overwhelming, taking these steps can help you manage your expenses, manage your debt and weather the storm as you get back on your feet.

1. Evaluate your situation

When facing a financial setback, it’s important to take a step back and review the impact of your situation. Different situations will affect your finances, your repayment strategy and the resources you have available to you.

Having as much information about your finances will help you make decisions on how to react. If you already have a budget, you already know what your essential expenses are and how far your savings can take you.

Using financial tools such as a debt payoff calculator can also help you see how much you can adjust your debt repayments to cover an expense. You can also see how much debt will cost in time and interest.

2. Organize your priorities

Your budget will be one of the most important tools for handling a financial setback. You can use your budget to see how much your essential expenses are and what you can cut out to pay your bills.

It can also help you see where you can save money. For example, though your groceries are essential, you can save on those costs by couponing, switching brands or going to a cheaper store.

If you’re ahead on your debt payments or making more than the minimum payment, you may want to see if you can divert some funds. Debt is still a priority of course, and you may have to spend a bit more on interest or take longer to pay it off. However, if you need to cover essential expenses, diverting a bit of your cash can be a better temporary option.

It’s important to keep in mind that your priorities will be specific to you. Saving on gas by driving around less may be more feasible for someone who works from home versus someone who has to commute to work. Be flexible and understand what’s non-negotiable in your budget and lifestyle.

3. Consider your options

You have several options to consider when you’re facing a financial setback, some of which can help ease the pressure you may be feeling.

If you already have several other debt repayments, refinancing or consolidation may get you a better interest rate and make your payments simpler.  first to make sure you’re getting a good deal.

A loan with a 0 percent introductory rate, such as a balance transfer card, can give you some breathing room and avoid raising interest while you pay off your new loan. Be careful, however – once your introductory period ends, you may have a higher interest rate than a standard loan.

If you own your home and have some equity, a home equity loan or a cash-out refinance can give you additional funds. Using your home equity can impact your credit score, your monthly mortgage payment and the interest you’re paying.

Selling some of your extra belongings or taking on a side hustle can help you supplement your income. If you’re feeling a significant crunch on your finances, you may also want to consider lowering some of your larger costs by moving to cheaper housing or trading in your car for one with a lower payment.

Finally, if you’re struggling with repaying your debt, you may want to consider debt relief through a company like National Debt Relief. They can help lower the payments you make on unsecured balances, allowing you to pay off your debt more quickly and affordably.

4. Seek help

You don’t have to tackle a financial setback on your own. You can find help to supplement your income and cut costs through federal, state and local programs.

For food costs, you may qualify for the Supplemental Nutrition Assistance Program (SNAP) through your state. You may also visit a food bank in your area or see if there are local food assistance programs. Other programs can help you with housing, childcare and medical costs, depending on your area.

If the federal government backs your loan, you may qualify for an income-based repayment plan that better suits your budget.

A local support system can also go a long way. Splitting groceries and child care or carpooling with friends, family and neighbors can help you save on costs and give you a safety net to rely on in tough times.

5. Talk to your lender

If you’re having difficulty making loan payments, you may want to talk to your lender about a deferment or forbearance agreement.

If your lender allows it, you can pause or reduce your loan repayments for an agreed-upon time. This break allows you to skip payments without incurring late fees or impacting your credit score. This can give you some breathing room to get your finances in order.

Forbearance or deferment isn’t a permanent solution. You need to start making payments once the forbearance period ends. Your loan will also accumulate interest in the meantime, which may increase your payment once you restart.

6. Adjust your timeline

Having a timeline for paying off debt can give you a clear idea of when you can fully pay off your balance and give you a goal to work toward.

Try not to lose sight of that goal, even in tough times. Reducing or forbearing your debt repayments may mean you’ll take a little longer to pay off your balance, but keeping on top of your timeline means you still have an end in sight – even if it’s a little moved down.

7. Rebuild your emergency fund

Once your financial situation is more stable, focus on rebuilding your emergency fund as soon as possible. An emergency fund is one of the most essential financial cushions to have and can help reduce the impact of future financial troubles.

Even a small amount toward your emergency fund each week can go a long way. It could still be enough to lessen an emergency loan balance or cover a payment that would have a late fee.

What next?

Facing a financial setback is never easy, especially when paying off debt. By evaluating your situation, drawing on the resources available to you and getting help to pay off or relieve your debt, you can take the difficulty in stride and get back on your debt payment journey.

If you want to learn more about managing your finances, mental health and debt repayment plan, check out Bankrate and National Debt Relief’s ongoing article series about debt. Watch this space for tips, tricks and exclusive stories from readers like you and their debt repayment journeys.