Three Reasons Part-Time Workers Are More Likely To Face Bankruptcy

December 4th, 2009 by Reed Allmand

Many Americans who have remained unemployed for over a year are now searching for any work they can find to fill the gap in their finances.  Oftentimes, former full-time workers are forced to work part-time which can often make them more vulnerable to bankruptcy. Here’s why:

1. Working part-time brings in less money than full-time work. For those who have faced a job loss, part-time salaries can leave a gaping hole in their finances. Oftentimes, the salary provided is not enough to cover expenses such as a mortgage or a car loan.  Despite working, the expenses of many newly minted part-time workers go unpaid, forcing these workers into foreclosure, car repossession and eventually bankruptcy. Bankruptcy is the last resort of many part-time workers.
2. Most part-time jobs don’t provide health insurance.  Workers who were previously employed in full-time jobs find themselves facing high health insurance premiums (via private insurance) or needing to forego health insurance altogether. While doing so may not become an immediate problem, workers who lack health insurance are vulnerable to incurring large amounts of medical debt even for the smallest illness.  Medical debt, like credit card debt is often sold to debt collectors and can lead to lawsuits and wage garnishments.  Many workers eventually file bankruptcy because of out of control medical debt. Bankruptcy is only way to legally discharge medical debt obligations.
3. Unemployment insurance benefits are reduced for part-time workers.  Many workers desperate to get off of unemployment insurance take any job they can find including underpaid part-time work. Unfortunately for them, if they are fired from that part-time job, their unemployment benefits check may be based on the part-time work they did, not the job before, thus significantly reducing the monthly payment they receive.  Once unemployed again and receiving little to no unemployment insurance income, many workers have no other choice but to file bankruptcy.