If you are unemployed and can’t pay bills, you may be wondering what your next steps are. It’s not always easy to know what to do next when it comes to your finances. And if you’re running low on money, it’s even more difficult.
Learning what it means to be financially stable is a big part of life. The good news is that even if your situation is daunting, there may be resources available. Below you will find more information on moving forward if you are unemployed and cannot pay your bills.
Applying for Unemployment Benefits
Unemployment insurance/unemployment benefits should be the first option to look into if you have lost your job. You must not have quit your job or lost it at any fault of your own to qualify for unemployment.
If approved for unemployment in your state, you will get a portion of your income, depending on a few variables. Unemployment benefits depend on variables like dependents and the time at your previous employer.
Unemployment funds can be sent straight to a bank account via direct deposit or mailed as a check. Once the state deposits those funds, you can use them to pay bills right away.
You can apply for unemployment online, over the phone, or in person. Unemployment may not be available for everyone. And if you fall into this category, you will need to look at other options.
Options if You Are Unemployed and Can’t Pay Bills: Solutions To Short Term Financial Hardship
Sometimes you may find yourself in between jobs or temporary job loss due to an emergency. If your unemployment period is short term, then consider these options to make your bill payments:
Consider an Emergency Loan Option to Pay Bills
Emergency loans can be an excellent option to cover expenses due to a one-time financial emergency and if you expect income to come in shortly. Loans options will come with reasonable interest rates if you have a good credit score and credit history.
Emergency loan options are available even with no job, which can help you make bill payments:
- Personal Loans
You can use personal loans for all kinds of expenses, including bill payments. Unsecured personal loans will work well for those with good credit. In contrast, secured ones will work if your credit score needs some improvement.
Find personal loans through a bank, credit union, or a private lender.
- Credit Cards
Most people keep their credit for rainy days. If you have a credit card, consider using it for a short-term unemployment period. Credit cards allow for cash advances as well.
- Payday Loans
Payday loans provide subprime borrowers with fast funding. If you are unemployed but have other sources of income coming in, you can use proof of that for approval.
- IRA/401k Accounts
Another option that may be possible is to borrow from your retirement accounts. Borrowing from retirement is often not recommended but may be a viable option for some during an emergency.
- Cash Advance Loans
Getting cash advance loans online may provide the help you need if you qualify. These loans have a short repayment period which could be the perfect option.
Talk to Your Lenders About Options
When your financial emergency is short-term, a few weeks up to a month, talking to your credit card companies or loan lenders may help. Many lenders— especially if you have been working with them for a long time— may be open to an extension. You can always take a late fee for the month as well if you have no other options. Keep in mind that late payments will impact your credit score.
Make Only the Minimum Payments for Bills
Automatic payments for bills can be helpful. However, you may be paying more than the minimum payment each month. Make sure to review any automatic charges that exceed the minimum amount and change that.
Be Smart About Bills You Have Control Over
Although you may not have control over certain payments for your bills, you may be able to save on some. Here are some categories you can cut down on for bill payments each month:
- Be mindful of your electricity and other utilities
- Cancel recreational subscriptions
- Use cheap transportation
- Find cheap alternatives to eating out
- Be aware of phone usage if you have limitations
Get a Side Job To Pay Those Bills
When going through a short-term unemployment phase, a side job can help you pay your bills. For example, ride sharing and food delivery are flexible and extremely easy to get set up.
Sell Some Stuff
Another option that can help you take care of your financial obligations is selling some of your valuable stuff. Consider selling electronics, jewelry, and collectibles to get the quick cash you need for your bills.
What To Do When You Are Unemployed and Can’t Pay Bills Long Term
If you are facing unemployment for a more extended period and don’t qualify for unemployment, look to these solutions to get your bills paid:
Look Into Assistance Programs for Financial Relief
Several assistance programs are available from government programs and non-profit organizations. If you are struggling financially, here are a few programs that can help:
- TANF (Temporary Assistance for Needy Families)
This is one of the most used federal government programs for families who need temporary relief (Can be long-term depending on your financial situation). TANF can help low-income families with all kinds of expenses, including with their bill payments.
- SNAP (Supplemental Nutrition Assistance Program)
SNAP provides food assistance, which can be a massive help for your grocery bill.
- Resources From HUD (The United States Department of Housing and Development)
HUD assists homeowners and renters. If you need assistance with mortgage payments or rent payments, they may be able to help. Additionally, they can help you pay for utility services and help with relocation.
- Non-Profit Organizations
Find Non-profit organizations with a simple Google search. For those facing financial struggles, specific emergencies such as medical bills or pet care, a non-profit or a charitable foundation may help.
Letting Your Lenders Know
If you are paying off student loans, a mortgage, credit cards, or a loan and cannot make regular payments, it will be helpful to let your lender know right away.
For example, contacting your federal loan provider may provide options like deferment, loan forbearance, or a new repayment plan for your federal student loans.
Or a mortgage lender may be open to providing refinancing assistance for a lower monthly payment.
Look into Downsizing Long-Term
Another option to consider if you are facing a long-term financial struggle is to downsize. Regardless of your financial situation, downsizing can be a great way to save money and reduce payments for all your monthly bills.
Consider Bankruptcy (The Worst-Case Scenario)
Bankruptcy is the last resort when a person cannot repay their debts. After filing for bankruptcy, it will eliminate credit card debt and other loans you may have. However, consider that bankruptcy can significantly negatively impact all three credit scores and remain on your credit reports for several years.
The Importance of a Savings Fund Learn To Manage Debt Before a Financial Emergency
Learning how to build an emergency fund will help you significantly. Learn to manage debt with a credit counselor or through apps and websites. No matter how small you start, creating a savings fund will be essential cushioning for an unexpected loss of employment.
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