Even though the headline figures suggest that unemployment in the UK is gradually decreasing, there are still well over two million people still looking for work. Meanwhile, many of those who have found jobs are left with nothing but a part-time role which isn’t sufficient enough to meet their basic costs such as rent/mortgage payments, food and utilities.
People who have recently found themselves without a job may be forced to take out loans in order to cover their costs and make up for lost income. It might seem like a normal thing to do, but later on, it could have dire consequences when the time comes for repayment. Once that happens and an unemployed individual doesn’t have the funds to meet repayments, what can they do?
Unemployed people are protected to some degree in countries like the US if they’re in the process of paying off their mortgage. However, in the majority of cases here, if a home isn’t fully paid-for and the homeowner cannot keep up with scheduled payments, then it’s likely that the property will be seized by the bank or building society that provided the mortgage in the first place.
While things might seem bleak for unemployed homeowners, if they have 100% of the property, then they at least have something to help pay back any massive debts built up over time. Even if they lose their property in order to satisfy creditors, at the very least, they’re less likely to suffer becoming bankrupt.
No home, no chance?
Non-homeowners are a little more vulnerable to becoming bankrupt. As they have less by way of assets to pay off their debts, bankruptcy is one of the few options they have available when it comes to sorting their finances out, no matter how they found themselves out of work. In actual fact, 77% of people who file for bankruptcy are non-homeowners.
Declaring bankruptcy can be a messy process, no matter what leads to it or how it happened. However, homeowners are better placed when trying to avoid it and repay whatever money they owe in the form of unpaid bills, personal loans or interest payments.