We never know when financial disaster will strike. It could come in the form of an unexpected medical emergency or some other type of unexpected bill or expense.
In a new report published last week, consumers are urged to consider their options carefully rather than immediately turning to a lender.
In the event of a financial emergency, forming a step by step plan will allow you to explore various options and keep a grip of your finances. The first thing the report suggests consumers do is to look closely at the situation in its entirety.
This will help to determine exactly what you are trying to overcome. Different situations will have different impacts on your finances and this can greatly influence your plan of action. Some of the examples discussed in the report include the following:
1. If the emergency is that you are unable to meet the repayments on monthly obligations such as utility bills then the best course of action is to contact your service providers and try to work out an alternative payment plan with them directly.
2. If your debt has been sent to a collections agency due to non-payment then your plan of action might include keeping in contact with both the lender and the debt collection agency in order to agree a suitable repayment plan. The report also suggests that in this situation, part of your action plan should be to educate yourself on your consumer rights when dealing with a collection agency.
3. If you have been hit with an unexpected illness, then medical debts can quickly add up. In this situation the recommended action plan is to work closely with your healthcare billing and your medical insurance company to explore any relevant debt reduction opportunities and repayment plans.
One you have a clear image in your mind, and indeed down on paper, you can think about repayment options. For smaller expenses credit cards can allow you to pay off small debts and then repay gradually over time. However, for larger expenses it is a much better option to look at savings or personal loans as a way to cover unexpected expenses.