Chloe Meltzer | December 02, 2022
Summary: Did you recently lose your job? Not sure how you're going to manage your debt with no job and no money? Find out what you can do to get back on your feet again.
If you are suffering from debt and you are unemployed with no savings, it can be very stressful. Although you might feel hopeless, you have options. One of these options could be a credit card, but this is usually a bad idea. Many credit cards will allow you to make a minimum payment and carry credit, but it will lead to cumulative interest. This can add a huge amount of debt on to your plate. There are a few courses of action you can take in this situation.
1. Enroll in a hardship program
Credit card hardship programs are sometimes an option. Although it may be difficult to ask your creditor about it, some companies are willing to lower the monthly minimum payment. This is usually if you are close to defaulting. Interest will still compound in this case, and it will most likely continue to affect your credit score. This is usually used as a last resort.
There are also usually hardship programs for mortgage lenders and auto lenders. For student loans you will need to contact the loan officer to see if they are willing to suspend payments.
2. Make a budget and prioritize your expenses
Making a budget is easier than it seems. Some people will simply avoid making a budget because they think they cannot adhere to it. If you truly want to fix your financial situation you can do it. Begin with a budget and then cut back spending. Decide what you truly need and what you do not need.
If you need to revise your budget, look into two different categories. The first are mandatory and, the second, discretionary. Mandatory expenses are those such as housing, food, and utility payments. Discretionary payments are those such as dining out and attending movies, going to concerts or purchasing new clothes. You might even consider cutting out your car or choosing a lower amount of health insurance for a short while.
3. Cut your spending
Get a Roommate. One simple way to get out of debt when you have no job is to get a roommate. You need to cover your mortgage or rent, therefore a roommate can help to cover that.
Negotiate with your landlord. You can also attempt to negotiate with your landlord. Consider offering to do maintenance work or find tenants for the landlord in the rest of the building (for reduced rent). You could also consider moving somewhere that is cheaper or moving back in with family. If you own your home and this is one of the reasons you are in debt, it is better to find a roommate and rent out a room. It is not ideal, but it will be helpful to cover costs and stay away from foreclosure.
Save on utilities. To save on utilities, you can reduce your energy consumption. This will lower your monthly payment. It is not to say eliminate your heating or cooling altogether, but reduce the amount that you use it. You can also reduce the thermostat on your water heater and take shorter showers in general. This will help to cut both of your bills (electric and water).
Eat at home. Eating out is easy, but if you cook for yourself you can save a lot of money. It was found that Americans spend almost 40% of their food budget eating out. This is a lot and can help you get out of debt more easily.
4. Manage credit cards wisely while unemployed
If you can afford to pay your monthly payments while unemployed, then you should. If you cannot, then you should look into one of the other options. The same can be said for use of your credit cards. If you can afford to use them, then you can, but it is not a good idea to use your credit cards if you are unable to pay them off each month.
It may also be tempting to obtain new cards in order to have a larger line of credit. This is a bad idea because it will only add to your surmounting debt. By doing this, or not paying off your balance at the end of the month, will only become more costly. The best option is to stop using credit cards until you get a job once again.
5. Apply for government assistance
If you qualify for jobless benefits then you should definitely apply for them. For example, food stamps and school lunch assistance can be very helpful to give you more money to cover other debts. Although many people resist using government help, if you truly need help you should apply. Try to avoid cash advances, and instead seek out real help that won't come back to haunt you later on.
6. Think before withdrawing money from your 401(k)
If you are considering pulling out money from tax-deferred retirement plans like 401(k)s or traditional IRAs, you may need to think twice. You might face a large tax penalty for early withdrawals. You will also leave yourself without a retirement fund which could hurt you in the long run.
7. Take out a home equity loan to pay off debt
Sometimes taking out a low-interest home equity loan, or line of credit is a great option. Just be careful that you are not heading towards bankruptcy. If you are going in that direction you may be putting your home at risk. It is good to note that you will need good credit to qualify for the best interest rates.
8. Consider filing for bankruptcy
If you are continuously unable to obtain a job, and unable to pay your bills, then bankruptcy might be an option. This is a serious decision because it will lead to major credit damage. Despite this, whether it is a Chapter 7 or 13 bankruptcy, you will have bankruptcy protection. It will relieve your immediate financial pain but it should only be done if you have many different debts you cannot manage.
What is SoloSuit?
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
Respond with SoloSuit
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance
How to answer a summons for debt collection in your state
Here's a list of guides for other states.
Guides on how to beat every debt collector
Being sued by a different debt collector? We're making guides on how to beat each one.
- Absolute Resolutions Investments LLC
- Accredited Collection Services
- Alliance One
- Amcol Clmbia
- American Recovery Service
- Asset Acceptance LLC
- Asset Recovery Solutions
- Associated Credit Services
- Autovest LLC
- Cach LLC
- Cavalry SPV I LLC
- Cerastes LLC
- Colinfobur
- Covington Credit
- Crown Asset Management
- CTC Debt Collector
- Cypress Financial Recoveries
- Delanor Kemper & Associates
- Eagle Loan of Ohio
- Educap
- Estate Information Services
- FIA Card Services
- Forster & Garbus
- Freshview Solutions
- Fulton Friedman & Gullace LLP
- Harvest Credit Management
- Howard Lee Schiff
- Hudson & Keyse LLC
- Integras Capital Recovery LLC
- Javitch Block
- Jefferson Capital Systems LLC
- LVNV Funding
- Mannbracken
- Mariner Finance
- Medicredit
- Michael J Adams PC
- Michael J Scott
- Midland Funding LLC
- Mullooly, Jeffrey, Rooney & Flynn
- Mountain Land Collections
- MRS Associates
- National Collegiate Trust
- Nationstar Foreclosure
- Northstar Capital Acquisition
- NCEP LLC
- NRC Collection Agency
- OneMain Financial
- Palisades Collection LLC
- Pallida LLC
- Paragon Revenue Group
- Pinnacle Collections Agency
- PMAB LLC
- Portfolio Recovery Associates
- Provest Law
- PYOD LLC
- Reunion Student Loan Finance Corporation
- Revenue Group
- Regents and Associates
- RSIEH
- Salander Enterprises LLC
- Second Round Sub LLC
- Security Credit Services
- Sherman Financial Group
- Suttell and Hammer
- T-Mobile
- Transworld Systems
- Tulsa Teachers Credit Union
- UCB Collection
- Velo Law Office
- Velocity Investments
- Waypoint Resource Group
- Weinberg and Associates
- Wolpoff & Abramson
Win against credit card companies
Is your credit card company suing you? Learn how you can beat each one.
- Bank of America
- Capital One
- Chase
- Credit One Bank
- PayPal Synchrony Card
- SYNCB/PPEXTR
- Synchrony Bank
- Target National Bank
- Wells Fargo
Going to Court for Credit Card Debt — Key Tips
How to Negotiate Credit Card Debts
How to Settle a Credit Card Debt Lawsuit — Ultimate Guide
Get answers to these FAQs
Need more info on statutes of limitations? Read our 50-state guide.
Why do debt collectors block their phone numbers?
How long do debt collectors take to respond to debt validation letters?
What are the biggest debt collector companies in the US?
Is Zombie Debt Still a Problem in 2019?
If a car is repossessed, do I still owe the debt?
Is Portfolio Recovery Associates Legit?
Is There a Judgment Against Me Without my Knowledge?
Should I File Bankruptcy Before or After a Judgment?
What is a default judgment?— What do I do?
Summoned to Court for Medical Bills — What Do I Do?
What Happens If Someone Sues You and You Have No Money?
What Happens If You Never Answer Debt Collectors?
What Happens When a Debt Is Sold to a Collection Agency
What is a Stipulated Judgment?
What is the Deadline for a Defendant's Answer to Avoid a Default Judgment?
Can a Judgement Creditor Take my Car?
Can I Settle a Debt After Being Served?
Can You Appeal a Default Judgement?
Do I Need a Debt Collection Defense Attorney?
Do I Need a Payday Loans Lawyer?
Do student loans go away after 7 years? — Student Loan Debt Guide
Am I Responsible for My Spouse's Medical Debt?
Should I Marry Someone With Debt?
Can a Debt Collector Leave a Voicemail?
How Does Debt Assignment Work?
What Happens If a Defendant Does Not Pay a Judgment?
How Does Debt Assignment Work?
Can You Serve Someone with a Collections Lawsuit at Their Work?
How Many Times Can a Judgment be Renewed in Oklahoma?
Does Debt Consolidation Have Risks?
What Happens If You Avoid Getting Served Court Papers?
Does Student Debt Die With You?
Can Debt Collectors Call You at Work in Texas?
How Much Do You Have to Be in Debt to File for Chapter 7?
What Is the Statute of Limitations on Debt in Washington?
How Long Does a Judgment Last?
Can Private Disability Payments Be Garnished?
Can Debt Collectors Call From Local Numbers?
Does the Fair Credit Reporting Act Work in Florida?
The Truth: Should You Never Pay a Debt Collection Agency?
Should You Communicate with a Debt Collector in Writing or by Telephone?
What Happens After a Motion for Default Is Filed?
Can a Process Server Leave a Summons Taped to My Door?
Learn More With These Additional Resources:
Need help managing your finances? Check out these resources.
How to Make a Debt Validation Letter - The Ultimate Guide
How to Make a Motion to Compel Arbitration Without an Attorney
How to Stop Wage Garnishment — Everything You Need to Know
How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)
Defending Yourself in Court Against a Debt Collector
Tips on you can to file an FDCPA lawsuit against a debt collection agency
Advice on how to answer a summons for debt collection.
Effective strategies for how to get back on track after a debt lawsuit
New Hampshire Statute of Limitations on Debt
Sample Cease and Desist Letter Against Debt Collectors
The Ultimate Guide to Responding to a Debt Collection Lawsuit in Utah
West Virginia Statute of Limitations on Debt
What debt collectors cannot do — FDCPA explained
Defending Yourself in Court Against Debt Collector
Arkansas Statute of Limitations on Debt
You're Drowning in Debt — Here's How to Swim
Help! I'm Being Sued by My Debt Collector
How to Make a Motion to Vacate Judgment
How to Answer Summons for Debt Collection in Vermont
North Dakota Statute of Limitations on Debt
ClearPoint Debt Management Review
Indiana Statute of Limitations on Debt
Oregon Eviction Laws - What They Say
CuraDebt Debt Settlement Review
How to Write a Re-Aging Debt Letter
How to Appear in Court by Phone
How to Use the Doctrine of Unclean Hands
Debt Consolidation in Eugene, Oregon
Summoned to Court for Medical Bills? What to Do Next
How to Make a Debt Settlement Agreement
Received a 3-Day Eviction Notice? Here's What to Do
How to Answer a Lawsuit for Debt Collection
Tips for Leaving the Country With Unpaid Credit Card Debt
Kansas Statute of Limitations on Debt Collection
How to File in Small Claims Court in Iowa
How to File a Civil Answer in Kings County Supreme Court
Roseland Associates Debt Consolidation Review
Do Debt Collectors Ever Give Up?
Can They Garnish Your Wages for Credit Card Debt?
How Often Do Credit Card Companies Sue for Non-Payment?
How Long Does a Judgement Last?
How Long Before a Creditor Can Garnish Wages?
How to Beat a Bill Collector in Court
It only takes 15 minutes.
And 50% of our customers' cases have been dismissed in the past.
"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" – Heather
Not sued yet?
Use our Debt Validation Letter.
Our Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
As someone deeply immersed in financial planning, debt management, and legal solutions regarding debt collection, I can confidently discuss various aspects addressed in the provided article.
Firstly, the article emphasizes the challenges faced by individuals who have lost their jobs and are struggling with debt. It touches upon strategies to handle this situation, such as enrolling in hardship programs offered by creditors, creating and adhering to a strict budget, cutting down on expenses, and seeking government assistance where eligible.
Let's delve into the concepts addressed:
Debt Management Strategies:
- Hardship Programs: These are offered by creditors to reduce monthly payments for individuals struggling with debt, usually before defaulting. It's a way to alleviate immediate financial strain but might affect credit scores.
- Budgeting: The article stresses the importance of creating a budget to manage expenses effectively. It categorizes expenses into mandatory (housing, food, utilities) and discretionary (dining out, entertainment) to help prioritize spending.
- Expense Reduction: It suggests various ways to cut spending, such as getting a roommate, negotiating with landlords, saving on utilities, and cooking at home to reduce costs significantly.
Credit Card Usage During Unemployment:
- Advises caution when using credit cards during unemployment, suggesting to pay off balances monthly if affordable. Accumulating credit card debt without the means to pay it off can worsen financial situations.
Government Assistance and Other Options:
- Encourages exploring government aid options like jobless benefits, food stamps, or school lunch assistance to alleviate financial strain.
Financial Risks:
- Warns against prematurely withdrawing money from retirement plans like 401(k)s due to hefty tax penalties and long-term impacts on retirement savings.
- Discusses the option of taking out a home equity loan to pay off debt but cautions against risking one's home and emphasizes the need for good credit to secure favorable rates.
- Explores bankruptcy as a last resort for those unable to manage multiple debts but highlights the severe credit damage it entails.
Legal Solutions for Debt Collection:
- References SoloSuit, a service designed to simplify responses to debt collection lawsuits. It explains the platform's functionality, allowing users to respond to lawsuits by answering questions and having attorney-reviewed documentation.
- Provides resources and guides for responding to debt collection lawsuits in various states and offers insights into handling different debt collectors and credit card companies in court.
This comprehensive article touches on various financial, legal, and practical aspects of managing debt and unemployment, providing guidance on navigating these challenging situations effectively.
If you find yourself facing legal action due to debt, services like SoloSuit can offer guidance and aid in responding to lawsuits, potentially leading to dismissals or favorable outcomes. However, it's crucial to seek tailored advice or legal representation based on individual circ*mstances for the best resolution.