The late Princess Diana was once quoted as saying, “Family is the most important thing in the world.” Few families can argue with that statement, and most would go to great lengths to protect their other family members in the event of a real emergency – and that includes financial ones. The current economy is unreliable at best, with more and more people facing layoffs as companies downsize in attempt to save money. Having an emergency fund to cover several months’ worth of bills in the case of an emergency is a great idea that can relieve many families of the stress associated with anticipating what might happen.

However, it’s difficult to plan for potential emergency situations when you’re already facing a pile of debt. Debt is like a thief that lurks waiting for an opportunity to steal the things you hold most dear, which sometimes could include your family or an established career as a working professional. Opportunities that give debt the opportunity to pile up go beyond ones related to your job to include illness, vehicle accidents, and property damage. Regardless of the reason for an emergency, lacking the funds to cover it – especially in families where there is existing debt – is like inviting debt to make itself at home in your financial situation. Therefore, before you can plan for your financial future it’s imperative that you take care of mismanaged money from your past.

Not All Emergencies Are Undesirable

Some emergencies are more of an urgent situation. For example, when our oldest son was just six months old, my husband and I found out we were expecting again. At the time we lived in a one-bedroom house which meant hiring a contractor to add on a room or sell the charming bungalow we’d bought as newlyweds and move into something bigger. We decided on the former but when we went to the bank to discuss our chances of getting a loan to cover the work we were faced with a huge problem – over $10,000 in credit card debt!

Fortunately the loan officer had experience in dealing with young couples like us before, ones who had mismanaged money and abused credit cards until they were in over their heads, and offered invaluable debt resources. She gave us an unofficial checklist of things we could do to help get a loan approved that would not only cover the work necessary to add another bedroom on to our house, but would also consolidate our credit cards, paying them off and instead leaving just one manageable payment each month. Here are some tips she offered for helping to get our loan approved:

• Ask for the amount you need.Requesting more money than what’s necessary to cover your debt just looks greedy, and asking for not enough is just irresponsible.

• No job? Huge problem!Would you loan money to someone who had no way of paying it back? Even if it’s someone you trust, until the loan is repaid there would be a nagging feeling of “What if I’m just out that money?” Your bank feels the same way.

• Be prepared.Show up with all documents necessary. Have a list of everything you’d like to consolidate. Have a business name, address, contact person, telephone number, your account number, the amount of debt owed, and the write-off amount for every item on that list. The more prepared and organized you are, the more serious the bank will take your request for a loan.

• Be positive and humble.Never go into a meeting with a loan officer with a negative attitude. Don’t apologize for your request. One of the services a bank provides is loaning money, so you aren’t inconveniencing them by asking that they consider allowing you to benefit from that service. However, you should be just a little humble. Bold statements that defy your credit history or anything else the bank can easily check is no different than asking for the bank to refuse your application.

• Discuss risk and rejection.Be honest about how you intend to pay back the loan. Perhaps your company was recently forced to lay off 500 workers. How secure is your job? Also, discuss what options might still be available in the event that the bank rejects your loan. In this kind of situation it’s best to hope for the best – but prepare for the worst.

Unfortunately, the bank did reject our first attempt for a loan. Our bad credit history was a huge black mark against us. Sure, my hair looked great but was it worth charging $50 for bi-weekly salon appointments? It definitely was not worth it, and it was those frivolous expenditures that led to our situation in the first place. What a horrible catch-22! Our bad habits with money created a pile of debt but we couldn’t fix the debt because of our history of bad habits with money.

The Benefits of Having a Co-Signer

But our story didn’t finish there. Fortunately, a close family member heard about our situation and offered to co-sign a loan for us. The benefits of having a co-signer were a true blessing. The bank offered us a much better interest rate, and after two dozen on-time payments in a row the bank released our co-signer completely. It not only relieved the person of their financial obligation, but also helped boost our credit score in the end.

These days we’re still in the same 2-bedroom house with our sons sharing the second bedroom. However, thanks to learning from our past mistakes, the house payment is our only monthly bill outside of a couple of utilities, like electric and cable. If you’re in a similar situation with debt, don’t give up. Help is out there, even when it comes from an unexpected source.

About the Author

Freelance author Melissa Cameron often turns to Jubilee dm when she has questions about paying down debt. Whether it’s something that affects her own family or a reference for something she’s writing, she knows she can depend on the useful guidance in the articles and tips found there to help provide reliable answers. When she isn’t working you won’t find Melissa in her home office. She prefers being outdoors whether it’s working in her garden, walking her golden retriever around the block, or hiking with her family.