When Should You Get A Pension Advance Loan?

When collection agencies are calling you on a daily basis, it may be tempting to pay them to avoid further hassle -- but these payments can leave you without the funds to pay your electric bill or put gas in your car. If you're cash-strapped, you may have already exhausted your short-term debt options, like payday loans or auto title loans. In other cases, you may be retired or unable to work, and can't qualify for any loans that require a regular non-Social Security income. However, for those who are vested in a pension (even if you're not yet receiving payments), a pension advance loan could be an untapped alternative. Read on to learn more about pension advance loans and when such a loan may be the best choice for you. 

What is a pension advance loan?

Pension advance loans are an alternative to paycheck advance loans for those who aren't receiving regular wage pay, but are receiving Social Security and a pension. Because Social Security payments are exempt from garnishment, they're ineligible for consideration in the lending process, even if they make up the majority of your household income. However, you'll be able to sign over your next pension check or two in exchange for cash today, which can be useful for those who receive biweekly or monthly pension payments and are facing a sudden emergency expense.

Another type of pension advance loan is one that offers a lump sum in exchange for a fixed future portion of your pension after you begin collecting it. This lender may require you to sign over survivorship rights (or a portion of your spouse's survivorship rights) in the event you pass away before collecting enough pension payments to repay the original loan and all interest charges.

When might a pension loan be a good idea? 

While a financial emergency may require quick action, it can be useful to review your total financial situation and determine if more debt is a good move. If you're facing significant medical or consumer debt at interest rates you're unlikely to ever repay, bankruptcy may be your best alternative. Often, you'll need to wait a specified period of time after your last loan before filing for bankruptcy protection (or choose to repay this loan outside the bankruptcy process), so taking out a pension advance loan could extend the amount of time you'll need to wait before filing for bankruptcy, 

However, if your cash crunch is temporary and there is a tangible end in sight, it may be worthwhile to use your pension for cash today and recoup your lower pension payments through other means. Having utilities shut off or not being able to afford gas to get to a paying job could sink you into an even deeper financial hole, while a pension advance loan can offer you a way out.

For more information, visit a website such as http://www.usacashservices.com.