Debt Dilemmas Of The Long-Term Unemployed and How To Overcome ThemIf you’re one of the millions of 99ers then you’ve probably been unemployed for about 2 years.  While being unemployed can give some workers access to weekly benefits, that unemployment income usually is not enough to pay their basic expenses and their debt obligations.  Because of this debtors who have remained unemployed for a year or more find that their credit scores suffer and that they are subjected to a barrage of creditor calls and letters amongst other more harsh collection tactics such as lawsuits.

Dilemmas that long-term unemployed debtors face:

  1. Unemployed debtors who are unable to make minimum payments on their credit cards and other debts are hit with harsh penalty fees and even lawsuits.  Even if a creditor knows that they cannot collect on a judgment, they will still file a lawsuit in the hopes that they can enforce the judgment once the debtor becomes employed again.  Debtors facing aggressive creditors and lawsuits should not ignore the problems.  If a lawsuit is being filed, the debtor may want to consider bankruptcy to protect their assets now and their future income.  The bankruptcy will stop the lawsuit, prevent a judgment, discharge the debt and prevent the creditor from going after the debtor’s income in the future.
  2. Sometimes unemployed debtors find temporary jobs or part-time jobs that don’t pay enough, but allow them to get off of unemployment benefits.  Debtors need to think long and hard before they decide to take that small amount of money to repay debts especially if the job is only temporary.  If the debtor is taking a permanent position that is significantly reducing their salary, they may want to consider bankruptcy so that they can reduce and even eliminate the amount of debt they owe.  The bankruptcy filing will also prevent creditors from enforcing any judgments they may have won during the debtor’s unemployment period.
  3. As unfortunate side effect of being unemployed and unable to pay debts, the debtor’s credit score will be severely but not irreparably damaged.  However, many employers are now checking the credit reports of job candidates.  If a debtor has damaged credit and an employer who checks credit reports has expressed an interest in hiring them, they should take the time to briefly explain the circumstances surrounded their bad credit history.