Managing debts and bills if you lose your job

Sometimes life takes twists you can’t predict. Unexpected bills, losing your job or being too ill to work can impact your finances and make keeping up with your credit payments feel like an uphill struggle.

If you’re struggling to keep up with your repayments, the best thing you can do is be proactive – taking every step you can to make the situation more manageable. It’s also important to remember that you’re not alone – the helplines and services below can provide some useful reassurance and guidance.

What to do if you’re made redundant

Whether your redundancy is expected or not, there are steps you can take to effectively juggle ending your old job while you search for a new one.

When the redundancy is announced, it can be upsetting – but it’s important that you keep a clear head and ask the questions which matter. Ask your manager or HR representative about:

• When your last day in the office will be.
• How much you’ll be paid on your final payday.
• Your redundancy package (especially if you’ve worked at your current company for over two years).
• Whether you are entitled to garden leave or not.
• Your duties during the redundancy period, and whether you can take time off or work reduced hours to accommodate interviews and job hunting.
• Any handovers you’ll need to complete, and who will be organising these.

If you’re not entitled to gardening leave, many companies will let affected employees go home on the day of the redundancy to minimise distress and let them come to terms with the news.

Sometimes businesses are required to enter a period of consultation before your redundancy can be formally made – if this happens, you’ll be told that you’re at ‘risk of redundancy’. During the consultation period, the company – and any teams which are challenging the decisions made – will attempt to find workers any suitable roles within the company so redundancy can be avoided. However, it’s best to plan for your own future and seek out alternative employment, as there are no guarantees your company will find you another suitable role.

Managing your money if you’re made redundant

The sooner you speak to your lenders and explain your situation, the sooner you can potentially amend your debt repayment plans.

• Inform your lenders if you’re having financial difficulties. They will be able to tell you what your options are available in light of your redundancy and possible issues with repayments.
• Make a list of all the loans or credit cards that you need to pay off. If you can, prioritise the accounts with the highest interest first to avoid paying even more interest in the future.
• If you can, cut back on your spending on the non-essentials, such as nights out and trips to the cinema, until you get another new job and your debts are being repaid at regular intervals again.
• You can save money on home and food bills by heating your home effectively and by cooking for yourself at home.
• Don’t spend extra money on items which may cost you extra long-term, such as holidays, a new mobile phone contract, or home entertainment systems – even if you can pay off what you owe over several months.
• Look into freelancing or part-time work while you search for your next role. There are several job sites which offer almost-immediate work – however, the positions aren’t guaranteed, and you will need to have relevant skills to be considered.
• Resist the temptation to take out more credit cards to cover your debt.
• Talk to friends and family if you’re struggling. They may be able to help you by gifting or lending you money, or they may just be able to provide you with support. For example, they may be happy to babysit while you look for work, or go to interviews.
• Review your credit report. We can help you understand your financial situation by showing an overview of your credit accounts and a summary of their balances.

Helplines and services if you’re struggling with debt after redundancy

If you’re struggling to make ends meet, there are several companies who can offer you guidance and emotional support.

Citizens Advice: Check to see if your redundancy is lawful, what you’re entitled to if it is, and what to do if you think your redundancy isn’t lawful.

Money and Mental Health: This charity, backed by Martin Lewis, provides free support for people who are suffering mental health issues as a result of money troubles.

National Debtline: This charity offers free, expert help and guidance on dealing with your debt. You can contact them for free on 0808 808 4000.

StepChange (formerly Consumer Credit Counselling Service): Each year, this charity helps around 650,000 people to deal with their debt problems. You can contact them for free advice on 0800 138 1111.