Not Hiring

The latest job loss report released by the Labor Department is not encouraging.  There were 85,000 job losses in December and that’s after employers added 4,000 jobs in November.  It just seems that America’s workers can’t seem to get a break.  Even those who have been looking for work for an extended period of time remain unemployed.  There are 5.4 million Americans receiving unemployment benefits and that’s not counting the millions who are receiving benefits through unemployment’s emergency extension.  So how does this widespread joblessness bode for Americans’ future finances?  The truth is that this nation is not set up to handle the long term unemployment we are now experiencing.  People who have debts, such as a mortgage, credit card or even a student loan don’t have access to adequate forbearance systems that will allow them to forego paying their bills while unemployed. Even for unemployed Americans who have traditional mortgages, job losses are becoming a leading cause of foreclosure.  And for those unemployed Americans who have credit card debt, there is absolutely no method to forego those payments without serious damage to their credit report and/or an imminent creditor lawsuit.

So what will happen to all of those unemployed debtors?  Many will file bankruptcy.  If this unemployment rate does not improve we may see millions of Americans filing bankruptcy in 2010 at a rate that even surpasses the record number of bankruptcy filings in 2005 after changes were implemented to the bankruptcy code.  The irony of it all is that legislators made those changes to the bankruptcy code under the false assumption that those filing bankruptcy were trying to manipulate the system.  What they didn’t consider is that many Americans just need to file bankruptcy simply because they can no longer afford to pay their debts.

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