Debtor and Creditor

Losing a Job and Your Obligations to Creditors

It can be very stressful to suddenly find yourself out of work and potentially unable to pay your bills. The best thing to do is to contact your creditors about your job loss right away because they may actually be able to help you. You and your lenders should be able to come to an agreement about what can be done.

File for Unemployment Benefits

One of the first things you should do after losing your job is file for unemployment benefits. There are certain criteria that must be met. Your local Employment Service Center will be able to help you.

Eligibility for unemployment benefits depends on how long you have worked, and you must have become unemployed through no fault of your own. Thus, if you quit your job or are fired for cause then you won't be eligible for unemployment benefits. Also, you aren't eligible for unemployment benefits until any separation or severance pay runs out (this applies only when your severance is paid over time rather than paid to you in a lump sum).

If you are eligible, get what you need to file for benefits. You must have the following:

  • Your Social Security number
  • A list of past employers, their addresses and your dates of employment
  • If you aren't a citizen, you might need your alien registration number
  • If you were in the military, you might need your dates of service

Apply for unemployment benefits through your State Unemployment Insurance Office, which may allow you to apply online, by phone or in person. Apply as soon as possible since you will not receive your first check for a few weeks.

Paying Rent

Losing your job doesn't excuse you from paying rent according to the terms of your lease. A landlord doesn't have to forgive your rental payments just because you lost your job. You should let your landlord know your situation right away and see if something can be worked out.

Some annual leases do allow you to sublease, in which case you don't need to get out of a lease agreement, you just need to find a trustworthy tenant to sublet to.

Landlords don't want their leases broken, and most will probably rather work with you than have you possibly flee without notice causing them to lose a month's rent. If you offer to help find a new tenant, a landlord may let you get out of a lease agreement early with minimal penalties.

If your landlord isn't willing to work with you, you may want to contact a local tenant's rights organization or a lawyer to help you out. These professionals are familiar with all of the ways to legally get out of a lease agreement.

Paying your Mortgage

If you have monthly mortgage payments that are too high for you to pay due to your job loss, contact your lender as soon as possible and explain your situation. The officer in the mortgage lending department may allow you to pay only the interest for a certain period of time. Alternatively, you may be able to postpone a few payments until you have a job again.


Don't ignore your bills. If you find that you can't pay your bills on time, contact your creditors immediately and discuss some possible solutions such as:

  • Freezing payments for a few months
  • Making smaller payments that you can afford for a short period of time
  • Refinancing any loans by making another contract for smaller payments over a longer period of time

Your creditors might be more willing to reduce your payments if you get in touch with them before missing your first payment. Don't wait to contact them until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.

Where to Turn for Help

If you find you need outside help, turn to social agencies. Several programs, such as Food Stamps and Medicaid, are available for families needing financial aid. Your family's resources and family income determine eligibility.

Questions for Your Attorney

  • May I cancel my lease if I lost my job?
  • How can I make sure that my job loss doesn't destroy my ability to get credit in the future?
  • Is there any public assistance for paying utility bills after a job loss?
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