Ask The Get Out of Debt Experts Unemployed

I Now Lost My Job and We Are Unable to Make All The Payments. – Petra

“Dear Steve,

Both my Husband and I were making ends meet with only a few bucks to spare to save up a little bit. We are making the minimum payments on our credit card bills, have a mortgage, tax debt, 2 auto loans and the usual bills like water, electricity etc. We were in the process of refinancing our house to get a bit of extra money that we had plan to spend on paying on one credit card at a time to bring down the total debt. I now lost my job and we are unable to afford to make all the payments. I am getting unemployment eventually, but not sure when that kicks in.

When calling 2 banks (auto loan, closed credit card that we started paying off) we were advised that we would need to talk to a credit counseling company. Can they really do something for us? Would we need to sell our house? What other options are there?


Dear Petra,

A credit counseling solution may be helpful but I’m not confident it is best suited for your situation.

Most mainstream credit counseling groups also do HUD Housing Counseling so they can let you know what mortgage modification programs might be able to help with the house payment, but calling your lender might give you that information as well.

The credit counseling approach can help when you can afford your monthly minimum payments on your unsecured debt, like credit cards, but a credit counseling program will not modify or change the terms you have on secured loans, like home and cars.

It seems that this is really the time you need to reflect and examine what your cash flow will look like moving forward. If you are unable to afford at least the minimum payments then you should really investigate bankruptcy as well. You can click here to find a local bankruptcy attorney to talk to.

See also  "I Have Three Degrees But I'm Broke And Miserable"

Bankruptcy will probably allow you to keep your house or even to hand it back to the bank if that’s what you decide to do. Since you are refinancing it sounds like you may have some equity in the home and in that case you are probably looking at a chapter 13 bankruptcy. In a chapter 13 bankruptcy you would make the regular mortgage payment but your unsecured debts would be reduced based on what you can afford to pay. The local bankruptcy attorney will fill you in on all of this.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • Dear Petra,
    We recently covered a series on Unemployment and managing your finances; including debt, ways to save, and how to find a new job. Here is a link to the series, check it out
    Hang in there,

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