The COVID-19 pandemic drastically created unemployment debts for many UK citizens. It seems to raise the concerns even after the lockdown. To eradicate the debt, people attempt to apply for new jobs, avail loans, extend loan duration, withdraw savings, and repay their security.
However, such options lead to the creation of more debts or loss of valuable assets. Also, borrowers often hardly manage their daily expenses. Fortunately, there are a few ways to manage unemployment debt after the lockdown and any other point in life.
A few viable solutions for debt management include budget creation, increasing ways of debt repayment, and availing permanent or temporary redundant schemes.
3 Ways of Managing Unemployment Debt After the Lockdown
● Budget Creation
Creating a budget would provide an idea about the minimum monthly expenditure. It would help in estimating expenses for food, electricity, travel, health, insurance, and more. It could also include a few extra pounds so that there is room for a few minor privileges.
Besides this, it would help to find out the amount of savings that can get put aside. Moreover, budget creation would help to get both an estimate and accurate expenses. In addition to this, it would help to repay ongoing debts with high-interest rates.
Covering such large payments would increase monthly income, lower expenses, and provide security to assets if they rely on secured loans. Unemployed people can also get food coupons to get meals from communities or government service providers to save on food expenses.
● Availing New Debt Repayment Methods
Unemployment can increase difficulty in repaying debts for credit cards, home or car loans, mortgages, renting, etc. Moreover, if any of these include security against an asset and a repayment misses or delays, the borrower may lose the secured asset.
Fortunately, guaranteed loans for unemployed can provide some financial relief. Besides this, no guarantor, unsecured, bad credit, payday, quick, short-term, and no credit check loans can also prove useful.
A debt management company, bank, financial corporations, or a lender can provide the best loan options with a range of interest rates. However, repaying loans in shorter durations can diminish loan costs.
In case making repayments becomes difficult to even for unsecured loans, the borrower can ask for a moratorium period from the lender. Furthermore, a borrower might require to pay slightly higher payments if this duration finishes and the repayments remain.
However, a moratorium keeps accruing interest rate. Therefore, opting for an extended duration should include utter carefulness. Sometimes, the lender may not give the option for a moratorium scheme.
In such cases, the borrower can pay a minimum amount and continue with the repayments. The interest would only incur on the outstanding balance. The lender may even give a new repayment plan after carefully analyzing the financial conditions.
Lenders understand that sudden unemployment due to the COVID-19 affected a large number of people globally. Therefore, the lender can give an affordable FCA guideline-based plan if the unemployment occurred due to the pandemic.
On the other hand, making completing small denomination repayments can improve credit ratings. Therefore, lenders would become more lenient in granting a moratorium scheme, extending duration, offering lower interest rates, and many other options.
It also opens doors for new lower interest loans that can help to overcome debt until a person gets employees. Post-employment the person can enhance credit score by making more and regular repayments.
● Making Use of Redundant Schemes
Aside from availing unsecured loans with high-interest rates, employees temporarily laid-off can get a statutory lay-off pay. Through this, a person can receive a £29 daily payment if it qualifies for terms and conditions.
The redundancy pay is also an option for permanently redundant employees with specific requirements. At some point, the debt would become negligible due to continuous repayments, and managing finances would become more manageable. It would decrease the burden of financial loss.
Conclusively, managing debt post-employment is possible by creating a budget, availing new debt repayment methods, and making use of redundant schemes. Besides this, opting for guaranteed loans for unemployedcan diminish debt on clearing existing repayments.