Paying Your Bills When You’ve Been Laid Off

It’s an unfortunate reality that employers can lay off workers for all sorts of reasons. And in an uncertain economy, you never know when you might be among them. More than 52,000 California employees were laid off during the first six months of 2023 alone—most of them in the southern part of the state. 

Along with feeling lost and unstable in your career, the financial hardships of being laid off can be devastating. Unemployment benefits may help, but many don’t come close to what you were making before. If you were having a difficult time making ends meet before you lost your job, your situation can quickly turn bleak. But you don’t have to navigate these trying times alone.

If you are unemployed and dealing with debt, not knowing what strategies you could use to relieve your financial situation only compounds the stress you’re already feeling. Why not find out what your options are so you can confront it head-on? If you live in San Mateo, California, or in the surrounding areas, our legal team at EH Law Group can help you explore your options for financial security.  

I Was Laid Off. How Am I Going to Pay My Bills?

Paying bills without a job will not be an easy task unless you have set aside a significant financial cushion. Unfortunately, few people have one they can dip into in an emergency. Even if they have savings set aside, it probably won’t last very long. If you have money in a retirement fund, such as a 401k, you don’t want to draw from it—you will pay penalties for early withdrawals, owe taxes on anything other than contributions to a Roth IRA, and deplete the value of the long-term earnings you were hoping to use in retirement.  

Unemployment Benefits

There are, however, some other steps you can take to help, beginning with unemployment. Most California employers pay into an unemployment insurance fund for the benefit of their employees. If you quit your job without cause, you won’t qualify for benefits, but if you are laid off or fired through no fault of your own, you can apply for unemployment benefits. There are other requirements, including minimum earnings prior to being laid off, being physically able and available to work right away, and being totally or partially unemployed. 

You should know, however, that unemployment likely will not pay you what you were earning while on the job. Weekly benefits typically range from $40 to $450. So, although unemployment will help, it likely won’t be enough to cover your lifestyle.  

Budgeting Strategies

The first thing you should do—whether you live with a partner or by yourself—is to reorganize your budget. 

If you reside with a working partner or spouse, you may be able to lean on their income until you find new employment. But that’s not a crutch you want to take advantage of—while your partner will likely be happy to help support you both, many households rely on dual incomes. And the last thing you want to do is risk creating any tension between you and your loved ones. Regardless, collaborate with your partner on how your finances will be allocated for the foreseeable future. 

As someone who lives alone, you will need to firmly set your financial priorities during this time. Your rent or mortgage, groceries, utilities, and other living necessities will be top priorities in your reduced budget. If you don’t have good options for public transportation (which can be important when searching for a new job), you should also prioritize your car payments and fuel costs. The less necessary expenses, such as buying new clothes, electronics, travel, and entertainment, will have to take a backseat until the gateway to more income opens up. 

Unemployment is an ideal time to tap into your emergency savings fund. But like unemployment benefits, your savings may not be enough. I you have access to credit cards, you can use them if you simply have no other way to pay for necessities. You will want to avoid taking a cash advance on them since interest rates on those transactions get pretty steep. Our advice would be to use them sparingly. What you spend will begin earning interest right away, and you are adding to debt and monthly payments you will need to continue making.  

How Should I Deal With My Debt Payments While I’m Without a Job?

Especially if you have earned a good credit score, you will want to protect it. Paying debts, such as credit cards, personal loans, mortgages, and auto loans—even while unemployed—will be crucial.  

Try to make at least the minimum payments on credit cards and other debts and make them on time. Contact your creditors about your situation. They may be willing to help in ways including waiving interest for a period, reducing minimum monthly payments amounts, or even postponing monthly payments by agreeing to pay a lump sum on a designated future date. 

Of course, this strategy can be tricky. If you are unable to find new employment with sufficient income to fulfill the obligations of any agreements you negotiate with your creditors, you could end up in a worse financial situation. This is why it might be worth your time to consult with a financial counselor who can assess your situation and discuss the pros and the cons of your available options.  

Should I Talk to a Bankruptcy Attorney If I’ve Been Laid Off?

Bankruptcy is a last resort for those who have found themselves in untenable financial situations for whatever reason, including after being laid off. However, you should know that exploring bankruptcy as an option might be a smart choice if you don’t think you can keep up with your debt while you’re unemployed. It may keep a bad situation from deteriorating further.  

Our bankruptcy attorneys at EH Law Group are also financial advisors. As your legal counsel, we will review your entire financial situation and give you options that go beyond bankruptcy if they work best for you. In the end, you may not need to file for bankruptcy. Hiring a bankruptcy attorney will help you find out.  

Take Charge of Your Finances

Our team at EH Law Group works with clients who have been laid off, lost their jobs, or otherwise found themselves in financial crises. We don’t pass on this important work to others in the firm. We work directly with you, every step of the way, whether you file for bankruptcy relief or not. 

If you have been laid off without a substantial emergency fund to fall back on, don’t wait for your financial situation to get worse. Call EH Law Group in San Mateo, California, now to set up a meeting. We are ready to help.