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I'm in Debt With No Job and No Money – What to Do

Chloe Meltzer | March 11, 2024

Chloe Meltzer
Legal Expert
Chloe Meltzer, MA

Chloe Meltzer is an experienced content writer specializing in legal content creation. She holds a degree in English Literature from Arizona State University, complemented by a Master’s in Marketing from California Polytechnic State University-San Luis Obispo.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: If you are in debt with no money, no job, you still have options: credit card hardship programs, budgeting and cutting expenses, seeking roommates or negotiating rent, saving on utilities, eating at home, applying for government assistance, carefully managing credit card use, considering withdrawal from retirement funds with caution, evaluating home equity loans, and considering bankruptcy as a last resort.

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.

Below are eight ways to deal with debt when you have no money or job.

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.

How do I get out of debt with no money?

Being in debt with no income is a challenging situation, but here are some strategies you can use to navigate this predicament.

Focus on your secured debts

First, assess your total debt and categorize it into secured (like mortgages) and unsecured debts (like credit cards). Focus on maintaining payments on secured debts to avoid losing assets. For unsecured debts, communicate with creditors to explore possibilities such as extended payment plans or lowered interest rates.

Get debt relief

Secondly, explore debt relief options, such as:

  • Debt consolidation, where multiple debts are combined into a single payment with potentially lower interest rates.
  • Debt settlement, where you negotiate with creditors to pay a lump sum that's less than what you owe. However, be cautious as this can affect your credit score.
  • Utilize community and non-profit credit counseling services for guidance and support. They can offer personalized advice and help you develop a plan tailored to your circumstances.
  • Consider legal options like bankruptcy only as a last resort. Bankruptcy can provide a fresh start but has long-term implications on your credit history.

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What to do if you have no money

In a situation where you have no money, prioritization is key. Start by creating a strict budget to control your expenses, then prioritize essential expenses like food, shelter, and healthcare. Cut down on non-essential spending and explore cost-saving measures in daily life, like using public transportation or cooking at home.

Seek employment opportunities, even part-time or freelance work, to generate income. Use job search engines, networking, and local community boards to find job openings. In the interim, consider selling items you no longer need for quick cash.

Apply for government assistance programs like food stamps, unemployment benefits, or other social services that you qualify for. These can provide essential support during tough times.

Explore community resources like food banks, shelters, or charities that offer aid to those in need. Many communities have organizations dedicated to helping people in financial distress.

No job, no money? You still have options

When faced with the dual challenge of having no job and no money, it's important to look for a job before you worry about your debts.

Tailor your resume for each application, leverage social networks for job leads, and consider broadening your job search to include different industries or part-time positions.

Utilize free or low-cost resources for job seekers, including libraries, community centers, and online courses to improve your skills and employability. Attend job fairs and workshops to network and learn about new opportunities.

In the meantime, explore alternative sources of income like freelancing, gig economy jobs, or online platforms where you can sell services or handmade goods. These can provide some financial relief while you search for more stable employment.

Focus on maintaining a positive mindset and resilience. Job hunting can be a long and challenging process, but staying motivated and proactive is key to overcoming this difficult phase. Remember, seeking help from career counselors, mentors, or support groups can provide valuable guidance and emotional support during this time.

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