Laid Up? How To Get Those Loan Payments Deferred

| February 2, 2014
English: First 4 digits of a credit card

English: First 4 digits of a credit card (Photo credit: Wikipedia)

No matter how much money you make on an annual basis, you could easily find yourself in financial trouble if you become injured due to an accident or unexpectedly laid off work. Therefore, it is essential to take proactive steps to protect yourself and your credit rating, just in case you end up dealing with an emergency situation. After all, failure to take these steps could easily lead to your vehicle being repossessed and your home going into foreclosure.

How can I get Loan Payments Deferred?

There are multiple different ways to protect yourself from a financial emergency. For example, many people place a certain percentage of their monthly salary into a savings account so that they will be able to survive for at least six months if they lose their job. However, this is not always a feasible option, and it is also very possible that you will need assistance for longer than that. Due to this, it is critical to familiarize yourself with the many different options that are available for deferring loan payments.

1. Credit Disability Insurance – Many loan and credit card providers offer consumers the opportunity to add disability insurance to their monthly payment, and this will provide you with the opportunity to have your credit card or loan bill paid for you if you end up suffering from a qualifying event. However, it is important to keep in mind that it typically takes two to four weeks for this insurance policy to kick in. In other words, you will still most likely end up being responsible for making one payment after you become disabled due to an injury or illness. If your injury is work-related, you will need to know the details of your insurance policy and any rights you have under your state’s law. You can use search terms like Michigan workmans comp law firm to find helpful legal assistance.

2. Credit Involuntary Unemployment Insurance – This form of protection is offered by credit card companies and some other lending institutions to assist people with the process of dealing with an unexpected and involuntary unemployment that lasts up to a previously specified amount of time. As long as you meet all of the qualifying criteria, including having this policy in place in advance, your monthly minimum payments will be taking care of after an initial waiting period passes. In most cases, eligible individuals will be able to begin drawing this benefit after 30 days.

3. Mortgage Forbearance Agreement – Also known as a deferment, this option gives homeowners who fall behind on their mortgage payment due to unemployment or illness the option to postpone their payments for a set period of time. Once the period is over, you work with your lender to develop a repayment plan that allows you to resume making your regularly scheduled mortgage payments and the deferred payments over time. You might be allowed to pay a little of the deferred amount each month with your regular payments or  some banks will even allow the deferred payments to go on the back end of the loan.

4. Personal Insurance – Companies such as Aflac offer personal insurance policies that enable the insured individual to collect payments if they are unable to work due to disability or illness. These policies are considered to be supplemental, and they can help people pay for their bills as long as they meet all of the specified conditions of their policy.

Anyone who is dealing with an unexpected layoff or injury should immediately contact all of their creditors to discuss the situation. After all, communication is the best way to avoid dealing with bill collectors and lawsuits. In some cases, credit card companies and other lenders will freeze or reduce your monthly payments for a few months even if you do not have any type of credit insurance policy in place. However, the best way to protect yourself is by obtaining one of these policies because it will provide you with assistance for a much longer period of time.

Sylvia Burley is a freelance writer who writes on consumer topics such as credit protection and repair. She suggests you contact your credit card companies, as well as mortgage and other lenders to inquire about their programs. Before you find yourself disabled and unable to work, especially if you work in a high-risk occupation, get help understanding your state’s laws by doing general searches such as Michigan workmans comp law firm, and consider buying supplemental insurance.

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