In this turbulent period in the job market where unfortunately many citizens lose their jobs due to company restructuring, relocation of business activity, many of our concerned clients ask us about the thorny issue of the consequences of job loss on their current credit contract. We review this issue with you on the consequences of a layoff on your credit contract.
Current events oblige, here is a topic that interests our internet users. Unfortunately, the sovereign debt crisis that has settled across Europe has convinced many governments to adopt austerity measures intended to contain public deficits within the limits set by Europe.
The consequences were not long in coming as Europe entered a recession, mainly due to a very significant slowdown in household consumption. The automotive industry and the steel industry, to name just a few, show disastrous results that force the leaders concerned to find solutions. Unfortunately, it is often on the employment front that the repercussions are the heaviest. The year 2012 saw record numbers of bankruptcy declarations and job destruction in Belgium. In France, nearly 1,500 jobs disappear every day.
Unfortunately, it is the middle classes that are affected: workers, executive managers, and to a lesser extent senior managers. It is regrettable because it is this category of people who borrow and who could be confronted with credit risk.
What about a layoff on your current credit? This brief analysis applies to both installment loans and mortgage credit.
Consequences of a layoff on your credit contract: The principle
The layoff has no impact on your credit contract. In short, you must continue to pay unless you risk having your credit terminated. If you have borrowed with someone else, the entire credit burden falls on the solvent co-borrower. The latter cannot claim a reduction of their burden by half.
The solutions
They are not numerous. Either you have borrowed with a co-borrower who can assume the credit burden until you can find a new source of income, or you own a property free of charges. In this case, it is possible to grant you a new (mortgage) credit that will repay the current one by taking our guarantees on your property.
Job loss insurance
This insurance is unfortunately promised a bright future. If you feel that your professional activity is threatened, it will even become essential to subscribe to this type of insurance.
Characteristics and conditions of job loss insurance.
It is quite possible – even recommended – to subscribe to this type of insurance when you take out your credit contract. This insurance can accompany both an installment loan and a mortgage credit.
Conditions?
- Be at least 21 years old;
- 6-month waiting period after subscribing to the credit contract;
- Be in a permanent contract;
- Have completed your 3-month trial period;
- Be eligible for unemployment benefits.
Coverage?
Finally, the coverage is not unlimited. Some insurances guarantee you up to 12 months of monthly payment coverage after your layoff. Then, of course, based on the replacement income you can anticipate, an allocation will be made regarding the insurance coverage. It is important to discuss with your insurer and read your insurance contract carefully to understand its exact scope.