The most important thing to remember about dealing with lenders is that they don't want to foreclose any more than you want them to, especially if you have had a good record with them so far. Foreclosing on your house, especially if the economy is in bad shape, may not even net the bank enough money to cover what you owe. On the other hand, if they can work out a reasonable payment plan with you, both parties will be much better off in the long run.
As with any money you owe, your best bet is to show initiative and make the first move. Get an appointment to talk with your loan officer. When you meet, calmly explain your situation and provide a proposal for paying what you can. In many instances, a bank will allow you to pay only the interest on your mortgage for a period of time. This can drastically reduce your payments while ensuring that the bank is still receiving some return on its investment.
If you have a second mortgage loan, you may be able to work out a similar payment scheme. Most importantly, don't wait until the situation is out of control. Don't assume you'll have a job in three months and that it won't be a problem to be a few months delinquent on your loan. Not only will that make it extremely difficult to negotiate some other payment scheme if you're still out of work after three months, it can also significantly damage your credit rating.
Some other loans and thoughts on how to handle them are: credit cards. If you have large credit card balances, you'll need to postpone payments on them as long as possible.
Having cash on hand is far more important than your credit rating right now. If you have money in savings, don't use it to pay credit card balances. Even though the interest rate you are paying on credit card balances far outweighs any interest you may be earning on any kind of savings or investment plan, you need to preserve cash. The goal with credit cards is to pay as little as possible on each balance.
Assuming you have a reasonable credit rating, you can write to the manager of the credit department of the bank that issued the credit card. Explain that you recently lost your job, highlighting the fact that your credit rating has always been good, and ask for his or her consideration for a short period. If you offer to make monthly "good faith" payments ($5 or $10) and keep your word, the bank will likely work with you. Again, if you take the first step, any creditor will appreciate your initiative and be more likely to work with you.
Most importantly, if you have outstanding balances on one or more credit cards, take a pair of scissors and cut up all but one card. The card you keep should be a nationally recognized card (VISA, MasterCard, Discover, American Express, AT&T Universal Card) with the lowest balance. Use that card only for emergencies. Actually, this is good advice even if you are not unemployed. When you do start your next job, your first financial goal should be to rid yourself of high-interest credit card balances forever.
Consolidation loans. As with credit cards, write to the company holding your loan and set up a payment plan. Some payment is better than no payment at this point. Remember, though, hanging on to your cash is more important than maintaining an impeccable credit rating at this point.
Car payments. If you are part of a two-person working family, you may actually be able to do without one car. As strange as the idea may seem, you can get up every morning and drive your spouse to work, or he or she can try to find a car pool. Then you can sell one car and use the remaining one as you search for a new position. This is especially helpful advice if your car payment is large. As hard as it may be to part with an expensive car you waited years to buy, you really don't need that outrageous payment right now.
If you can't do without and have to make car payments, use the same strategy you're using with other loan payments. Take the initiative to work out a payment plan with the bank or finance company.
Transportation Costs
Because you'll be interviewing, you have to have reliable transportation. Beyond the cost of the loan, you'll have to pay for gas, repairs, and preventative maintenance for your car. At this point, do whatever maintenance you can do on your own. Delay anything expensive (15,000-mile checkups) and do the things that can have the most impact. Most car experts believe that changing your oil often is the cheapest, most important car maintenance item. It's also relatively simple to do on your own. Any repairs that do not cause a safety problem should be postponed.
