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Lost your job, can’t pay the mortgage? Act early and save the house!

by Chris Lang on June 9, 2009

Debt: mortgage on a houseWhen the times are good, hardly anyone asks the “what if” questions.

“What if I lose my job”, “What if our business fails”, “What if we can’t pay the mortgage or the credit cards”. I think that if there was a good time for these unpleasant questions, it would be now, in the officially recognized Global Financial Crisis.

Let’s face it – we spend a lot. Sometimes more than we should have. Sometimes more than we earn. And recession such as this one is a good time to re-assess our budget voluntarily, before God forbid our creditors come and make us do so. Or do we even have a budget?

Reacting to the global financial crisis, Choice released a report that IMHO is a must read for anybody, no matter how safe you feel right now money-wise. This report discusses quite a few important issues.

For starters, they say that we spend $160 for every 100 we make – which basically means that the majority of us live outside our means. And to think that only 10 years ago we spent only half that much!

This leads to the most logical conclusion – some belt tightening is in order. Here is how – in addition to the report, Choice have put together a calculator to help us understand where our money goes. It allows entering your income and all the expenses (nicely classified in categories) and shows whether or not your family is spending more than earning and on what.

But what do you do if it’s too late to make a budget, if your family is left with just one income or even worse, no income at all? Choice’s report says that the most important thing is to react fast, contact your lenders and see a financial counselor. I don’t know about you, but this was the first time I have ever heard about a financial counselor. Apparently they exist, are funded by the government and their job is to help you find the best debt relief solution for your family.

The report mentions a lot of options to help with paying bills: reducing the minimum repayments on mortgage (or even the interest!), a repayment holiday for people who lost their job, etc. I was surprised to learn that if you’re unable to pay your bills (such as energy bills or taxes), there is an option of contacting the billing company and asking for a flexible repayments plan. Another option they mention is a no-interest loan scheme.

And the most important thing – you should definitely seek financial counseling before signing a debt agreement with a debt relief company. Debt agreement is basically you saying to your creditors “I know I owe you a $1000, but can only afford to pay a $100 back.” and debt relief company arranges everything to freeze your debts, no more interest will apply and you will pay the agreed amount over a long period of time. As easy as this sounds, Choice says this is may not be the best solution for your situation and it will certainly harm your credit history.

Bottom line – Choice is saying this: you may be in debt and lost your income, but your still have consumer rights, the situation can be fixed and there are people you can see to seek help and solutions. Read the full report here and learn how.

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{ 3 comments… read them below or add one }

Anthony Zaccheo August 19, 2009 at 1:49 am

need helpNEW

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CARLO STUPAR October 13, 2009 at 5:32 pm

Hello there, just wondering IF there is a financial guru out there !! Since the sell off, of WIZARD home loans – our home & investment LOANS were handed over to GE Money in the carve up LATE in 2008 !! My attempts at negotiating a better rate with GE, Aussie, Mortgage house all failed !! Added to this , my wife lost her job in may this year, which has added to the stress. I am at my wits end as to WHY ‘GE Money’ without negotiation with us, was handed our motgages !! I am servicing the current loans BUT with the latest rate rise I am quite frustrated.

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Bernard Kelly December 10, 2011 at 3:54 pm

Hello Carlo – my suggestion is that, as an insurance against such events, we all need a parallel career to ensure that we’ll have access to additional revenue streams when we need them

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