Financial Recovery After A Missed Loan Payment

A personal finance setback can be frustrating- but you can recover.

Some financial problems are minor. For example, you add more to your credit card balance than you planned, or you don’t save as much as you’ve budgeted for the month. In both cases, no harm done- you can always change your behavior and improve next month.

For a growing number of consumers, debts have become a normal part of life, and the issue of missed loan payments has increased dramatically. If you can’t make a loan payment, take action sooner rather than later. You want to move fast to reduce the damage sustained to your finances, and taking action will make the whole situation less stressful.

Worst Case

The worst-case scenario is the risk that you default on a loan. Depending on what sort of loan it is, you’ll find yourself owing more money in penalties, fees and interest charges, which will build up your account balance.

Your credit scores will also decline, and you may need to contact the specialists at www.KCarpLaw.com/foreclosure-and-debt-relief/ in order to make your recovery easier. But that’s the point. You can recover. It might take years, but you can do it.

How To Get Help

Credit counseling is now a big thing; it’s a service designed to help you understand your situation and come up with the best solutions. It’s getting an outside perspective from a debt specialist.

Get free sample chapters from my book: Not Another Personal Finance Book.

In many cases, you can get a reputable counselor for free using the National Foundation for Credit Counseling (NFCC). Just make sure you ask about fees and charges upfront to make sure this will help and not hinder your situation.

Bankruptcy

Speaking to a few bankruptcy attorneys is a great idea when you need some drastic help. Just be prepared to hear the words, “you should really file for bankruptcy.” The reason they are suggesting this is simple: filing for bankruptcy may be a financial solution for you.

However, it is worth accepting that there might be better alternatives out there, so only use this as a last resort. Talk with a trusted friend or family member, and get their opinion.

Government Options

It doesn’t matter what area you live in, there is usually some form of public assistance that will be able to help you. That could be a local service, the federal government or another body that’s been set up provide relief for all those that have fallen behind on their payments.

The hope is that these programs will give you some relief and help you keep up with your loan payments, so that you avoid more drastic problems.

How To Recover

Here are some steps you can take to put a negative financial situation behind you:

• Budget: Use your bank statement and credit card statements to review your spending and create a monthly budget. Create a category for each type of spending. Some areas are fixed expenses (car payments, mortgage or lease payments), while other costs are variable (meals and entertainment).

 

• Cut variable spending: Review your variable spending and make some cuts. If you eat out three times a month, for example, cut back to twice each month. Rather than buy coffee at a shop each day, make coffee at home a few days a week.

 

• Savings account: Use the extra dollars from your spending reductions to fund a savings account, so that you can pay for an emergency, such as a car repair.

Implementing this plan will give you more confidence and increase your peace of mind.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0