Church deacons need to know the answer to this question. If a church member loses their job, that member needs practical steps to start taking immediately. Deacons can help them prioritize the bills they should pay with their remaining money…
Numerous websites and experts almost unanimously agree that the following bills are the ones you must prioritize in this order when money runs tight:
- Food and groceries (no restaurants) – You must keep your family fed.
- Utilities – essentials like electricity, gas, basic telephone. You must keep the power on. The utility companies move relatively fast when it comes time to disconnect utilities like electricity, gas, and water.
- Mortgage or rent – You need a roof over your head. Keeping your rent or mortgage paid keeps you in your home. There’s likely no better place to setup base and devise strategy than the place most familiar and comfortable to you. No family wants to be reduced to homelessness and live out of their car if they can avoid it.
- Household necessities – basic toiletries and medicine
- Life insurance – This is an expense unique to my list. That’s because it is a crucial aspect of the Bible-based personal finance program. Term life policies are crucial tools for protecting the family and the church from destitution, so their payments must not be allowed to lapse. Deacons should support families and provide assistance if necessary to keep the term life policies paid up.
- Car-related expenses (gasoline, monthly payments, insurance) – You need transportation to find a new job. But if necessary, sell your car to raise cash and use ride-sharing or public transportation until you find a new job.
- Child support – Parents must support their children. This is a biblical commandment (1 Timothy 5:8).
- Income taxes – the IRS will get real nasty with people who do not pay their taxes. They will tack on late fees, interest, and can take your paycheck (garnish wages). Hopefully this is not a problem most people will have. But if so, this will need to be addressed because otherwise it will make climbing out of the hole so much harder.
Read these following articles for more details and advice:
- Prioritizing Your Bills When Money is Tight
- Which Bills to Pay Off First (or Cancel) When Money Runs Tight
- Bills You Should Pay First
- What to do if you miss a paycheck
MORTGAGE PAYMENTS AND FORECLOSURE
One thing worth noting is that, generally speaking, a homeowner can miss about 4 payments (120 days) before the foreclosure process starts, according to the Consumer Financial Protection Bureau
The legal foreclosure process generally can’t start during the first 120 days after you’re behind on your mortgage. After that, once your servicer begins the legal process, the amount of time you have until an actual foreclosure sale varies by state.
If you are having trouble making your mortgage payments, act quickly. Contact your mortgage servicer to find out if there are options for you to avoid foreclosure. Respond to your servicer if they try and contact you.
The Consumer Financial Protection Bureau is an agency of the United States government responsible for consumer protection in the financial sector established in 2011 after the Great Recession of 2007-2008.
The homeowner should fight to prevent it from coming to this. They should keep in mind Scripture:
The wicked person borrows but does not repay, but the righteous person is generous and gives.Psalm 37:21, Unlocked Literal Version
One way the homeowner can delay the foreclosure process is to apply for loss mitigation. “Some loss mitigation options—such as a loan modification, forbearance agreement, and repayment plan—allow the borrower to stay in the home. Other options, like a short sale or deed in lieu of foreclosure, help a borrower give up the property without going through foreclosure.”
The homeowner applies for loss mitigation by contacting the loan servicer using the contact information on the monthly mortgage statements or their website. According to one lawyer, some states may require that the foreclosure process stop once a homeowner has applied for loss mitigation has begun.
Under federal law, if you send the servicer a complete loss mitigation package before a foreclosure starts or more than 37 days before a foreclosure sale, the servicer can’t start a foreclosure or move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, until:
* it informs you that you’re not eligible for any loss mitigation option (and any appeal has been exhausted)
* you reject all loss mitigation offers, or
* you fail to comply with the terms of a loss mitigation option, like a trial modification.
The borrower may be able to negotiate entering forbearance:
The lender agrees to lower one’s mortgage payment, or suspend it entirely for a specified amount of time.
A forbearance is granted before the borrower starts to fall behind; those who anticipate a period of financial hardship should contact their lender proactively to talk about a forbearance.
This can help borrowers avoid foreclosure before it even becomes a concern. The borrower may have to offer documentation to reassure the lender that s/he will eventually be able to get fully caught up on the loan.
After the forbearance period ends, the borrower will resume full monthly payments, and be expected to repay the unpaid portion of the loan using an agreed upon payment schedule.
This option is for those with temporary financial setbacks only. If you’re not sure that you’ll be returning to full financial health soon, then forbearance is not a good option for you.
Forbearance should be sought for temporary setbacks. The balance that wasn’t paid will then either need to be repaid in a lump sum or through another loan.
When a church member loses their job, they need to prioritize their bills and pay them in an order that makes the most sense.
They could panic and pay the wrong bills, which could jeopardize their overall well-being. They won’t have much money. They need to be strategic in how they use it. Help them avoid missteps here.