Surviving a personal financial setback or hardship
1. "How do I determine my financial priorities?"
When you are recovering from a personal setback, establishing financial priorities will help you focus your effort and resources. Not all of your household debts will equally impact your family. Your first payment priorities should be bills associated with your essential needs, including utilities, food, mortgage or rent, and insurance. While you may be able to find ways to save on all of these bills by cutting back and negotiating lower rates, paying them is extremely important.
2. "Can creditor hardship programs help me with my credit card debt?"
If you are in debt over your head and are finding yourself unable to even make the minimum payments, you can get help. One option is to request to be placed on your lender’s hardship program, which will re-age the account and lower your monthly payments. Many lenders offer these types of programs, including mortgage companies and credit card companies.
3. "I suspect I am a victim of identity theft. What should I do to report the problem?"
If you suspect that fraudulent activity has occurred on your account, the Fair and Accurate Credit Transactions (FACT) Act permits you to put a fraud alert on your account for at least 90 days. By adding a fraud alert, creditors are required to use “reasonable policies and procedures” to verify your identity before opening any new accounts in your name. This is most appropriate for those who feel they may have been victim of a phishing scam or have had their wallets or handbags stolen.
4. "How can I keep my health insurance coverage if I become unemployed?"
If you become unemployed, you may have the right to extend your medical coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA). Under COBRA, your insurance payments will likely be significantly higher than they were when you were employed, but they will be lower than similar coverage obtained on your own. Having appropriate health insurance coverage is essential because without coverage, a medical emergency could devastate your finances.
5. "What is voluntary and involuntary repossession, and how does it affect my personal credit?"
Some loans are secured with collateral, such as a vehicle. If the terms of a secured loan are not met, the financial institution may take back, or repossess, the collateral. When the consumer takes the initiative to return the object—before the financial institution takes it—it is called “voluntary repossession.” Both types of repossession, voluntary and involuntary, affect your personal credit in the same way. The only difference is that if you voluntarily return the collateral, you could save on some fees associated with its collection. Either way, the derogatory notation will remain on your credit bureau file for seven years.