Despite Turmoil, People Can Still Use Unsecured Personal Loans
The Economy and its Aftermath
People are using unsecured personal loans to fight their way out of debt. The recession wreaked havoc on finances—both business and personal. Consumers are still regrouping and trying to dig their way out of the aftermath of the economic downturn. Many people suffered huge losses including bankruptcy, foreclosure and divorce. Here are some ways to mitigate the consequences of each one.
Life After Bankruptcy
Kevin Chem, president of Total Attorneys in Chicago, said, “Only by doing a detailed analysis of your debt-to-income ratio and your ability to impact a change in your expenses or income are you going to get an idea of whether you should consider bankruptcy.” These days bankruptcy isn’t as negative a word as it once was. In fact, experts agree that filing for bankruptcy can sometimes be a better option for building credit than continuing to struggle. Chem added, “If you are borrowing money constantly from family in order to pay your bills or if you are getting notices of garnishments on the job, it may benefit you to look into bankruptcy.”
If you do go through a bankruptcy, your slate is clean. Once your debt is eliminated you may be in a better position in terms of your credit health. You won’t be a prime candidate for the best rates, but you will be able to get some credit. The best way to fix your finances after filing bankruptcy is to stop spending. Experts suggest that filers need to realize that what got them in trouble in the first place was over-spending and they need to be willing to stop. Chem adds that people should get some form of secured credit and start building a credit history right away. It’s the best way to bring scores up.
Life after Foreclosure
According to the Mortgage Bankers Association’s National Delinquency Survey, about 13 percent of mortgage loans are currently in foreclosure status, or at least one payment past due. Of course if you are past due, it’s best to call your mortgage company and discuss options as soon as possible. Most companies have loss mitigation departments that focus on helping homeowners in financial distress.
If you end up having to go through a foreclosure, there are also some things you can do to help your credit. Foreclosure will show up on your credit report for seven years, but its impact will lessen with time.
Michael Kay, Certified Financial Planner in New Jersey, said, “People who are in the midst of foreclosure can only see the problem and they can’t see a solution. Because they are just so invested in those feelings of failure, disappointment, and shock, the first thing I would say is acknowledge that you are where you are. Then get into offensive mode. Stop wallowing in misery. Yes, it is a bad situation, but let it go and commit to moving forward from where you are.”
Though you are in a financial difficulty, you still most likely will be able to get credit, unsecured personal loans and other lending aids if you are careful. Figure out why you fell behind and do an honest assessment of what happened. Then commit to changing your ways and start building credit little by little.
Divorce Thrown into the Mix
Divorce is another issue that many people are going through as a result of the financial stresses of the recession combining with marital stresses. One of the biggest concerns with divorce is the huge legal cost, but there are ways to mitigate it. First, try to divorce amicably. For the best options, try to come to resolutions on your own. Lisa Rosenberg Moore, family law attorney in New Jersey, stated, “You are being billed at an hourly rate and every hour you sit on the phone with your lawyer starts to add up.” The best thing to do according to Moore is to focus on how to best create a financial solution for your children and money, rather than focus on hurt feelings.
Getting Through Difficult Times
In the end, financial and family disasters have the ability to alter lives greatly. Though bankruptcy, foreclosure and divorce are difficult to maneuver, there are ways to manage. Be sure to be honest and take a look at what created the situation, then commit to altering your habits. With some intentional and proactive work, you should be able to qualify for credit cards, unsecured personal loans and mortgages sooner than you think.