You lost your job and you have debts. Too bad. It's time be an adult and use your good judgment to deal with the situation. No one needs heroes when times are good -- it's when life sours that you need a cool head. Job losses can occur for a variety of reasons. So, whatever the reason you lost your job, react in a way that makes the best of the new state of affairs. Look at it this way -- for now, that's your new job.
Assess the Situation
As soon as possible after you learn that you have lost your job, try to find out as much as you can about your situation. It is important for you to understand the reason for the termination. You and your employer should agree on the reason. If you give your lender -- and future prospective employers -- one reason for the termination and your employer says something else, that could be a problem for you. Impersonal reasons, such as the economy or a downturn in business, will be the best for you. Find out whether you will receive severance pay and how much. Ask about assistance in looking for a new job; sometimes employers will provide such help.
Make a New Budget
Draw up a new budget that reflects your loss of income. Figure in your severance pay, if any, and unemployment benefits. List your debts and other obligations. Determine which payments can be rescheduled or reduced. Your spouse and older children may be able to earn income from part-time work. Take steps to pare down expenses. You may be able to find interim work that will ease the situation until you find a new job. Determine whether any friends or family members can lend a hand if needed.
Plan Your Job Search
Decide on the type of job you will search for. If your problem was with the job itself, this could be your opportunity to find a job that is more suitable. If you know of a company or an industry segment where your skills and interests would make a good fit, concentrate your focus there. Write a resume that presents your background, education and skills in an appealing manner. Get help with this if you need it. You will want to show your banker that you are working on a well-thought-out job search plan.
Meet With Your Banker
Meet with your banker as soon as possible -- before your next scheduled loan payment, if possible. Tell her about your job loss and say that you want to do everything you can to keep the loan current. Show her your new budget, resume and job search plan. Ask her if the bank will give you any assistance with the loan. She may tell you that the bank can accept interest-only payments for several months. There may be other ways to waive or reduce payments for a period. The important thing for you -- and what will impress the bank -- is that you are taking positive steps instead of letting your loan slide into default.
Charles Crawford, a former commercial banker, has been a business writer in New York since 1990. He has produced marketing materials for an executive outplacement firm, written the quarterly newsletter of a medical nonprofit organization and created financing proposals/business plans. Crawford holds a Bachelor of Arts in English and a Master of Science in international affairs from Florida State University.