Frequently Asked Questions about loans, debt, and how to borrow responsibly.

Help when you're unemployed

By Pete Low    Share by email   Share:  Share on Facebook   Bookmark on  Digg on  Bookmark on Google   Submit on   Share this on Twitter unemployment help

If you become unemployed, your financial situation immediately becomes more difficult. The income you were counting on to repay loans and cover ongoing bills disappears, and the future can seem uncertain. Fortunately, there are ways to get help, though it's never easy. By assessing what debts and expenses you have, seeing what income may be available from unemployment insurance or temporary work, and figuring out a budget, you can try to protect your credit rating and move forward toward having a regular income again.

If I'm unemployed, can I get a government grant to go to college?


Question: I lost my job when the company I worked for went bankrupt. I want to train to be a nurse, since it's something I've always wanted to do and there seem to be more job openings in that career field. Can I get a government grant to train for a better career?--F. T., Minnesota

Answer: Yes, if you're receiving unemployment benefits, the Pell Grant program offers grants up to $5,350 to help with the cost of college tuition or attending a trade school or technical school. There are also some loans and work-study programs. See the site or call them at 1-800-4-FED-AID for more information.

How will being unemployed affect my credit rating?

I just lost my job. Is my credit rating going to go down now?--S.B.J., Montana

Answer: As long as you continue to pay any debts on time, it shouldn't affect your credit rating. Creditors only report when you miss a payment. Obviously, making payments is more difficult when you don't have income coming in, and that's where problems start to arise. If you expect that you won't be able to make a payment on time, talk to creditors and see if you can work something out to avoid them reporting problems to a credit bureau, which will affect your credit rating. The FTC offers advice on coping with debt. You may also want to check out services that help you consolidate or cut your debt and improve your credit score.

I got laid off. How can I get help finding a better career?

I used to work for the auto industry, but got laid off when everything went bad and have been working part time at different jobs since. I want to retrain for something that will pay better. Is there a way to get a grant or loan or help? I live in Ohio.--John G., Cleveland

Answer: Click on your state in this list on the US Department of Labor page. It will take you to information on help in your state specifically. As of 2011, Ohio has a program of special grants to help laid off auto workers. Each state's link lists the resources available to residents of that state who are unemployed.

Can I get help finding a job after being released from prison?

I was just released from prison and now I'm looking to turn things around. Where can I get help? --B.R.

Answer: One possibility might be your local Goodwill. Part of their mission is to help people who have been incarcerated improve their skills and succeed in the job market. They have employment specialists who can explain their various programs, such as occupational skill training, or preparing to get a GED or getting read for job interviews. For more information, see Goodwill's page on helping people with criminal background

Are there loans you don't need to pay back?

I just found a job, but now my car's broken down. I need to get it fixed so I can get to work (no bus out here in the country), but if I take out a loan, I'm already behind on my rent and electric bill. If I have to start making loan payments, I'll never get caught up, even after I start work!--Amelia, Seattle

Answer: If you're unemployed but you have a job offer, and there's a small unexpected, expense that's keeping you from working, such as a broken-down car, a license you need to pay for, or something similar, Modest Needs is one organization worth checking out. Read here for more information on eligibility. Their new employment grants come from people who don't expect to be paid back, but who just want to give you some financial help to help you get working again.

Are my unemployment benefits deactivated?

I got a text message that my unemployment benefit card has been deactivated. I'm still due benefits. What's going on? Is this legit?--Brooke, Albany, NY.

Answer: This is a common scam that's happening nationwide. Do not follow the instructions or give out any information. People have also been receiving phone calls saying the same thing. If you responded to the message, contact Chase's fraud department (since they're the ones who issue the cards). Otherwise, you can ignore the message, since if there is a problem with your benefits, neither Chase nor the unemployment benefits office would ask you to provide confidential information by phone or text message.

Can I get a payday loan if I'm unemployed?

I know that an unemployment check isn't really a payday, but it's regular income. Can I use it to get a quick loan? --H. Y., St. Louis

Answer: If you have any regular payment coming in, whether it's unemployment, alimony or disability, some payday lenders will accept it the same as a paycheck from a job. The minimum amount usually needs to be at least $1,000 a month, though a few will accept less. They also may want your payment to arrive by direct deposit to your bank account, so they know the money will be there when the loan comes due.

Will accepting unemployment benefits hurt my credit?

Someone told me that it's better not to apply, because it will hurt your credit, but that doesn't seem right.--Jason J., Illinois.

Answer: No. In fact, it's good to apply as soon as possible, since the unemployment benefits can help you pay bills and stay current with your creditors. Even though the benefits will be less than what you earned, some income is better than none while you're looking for a new job. To find information on how to apply in your state, go to the U.S. Department of Labor site and click on your state here:

What if I lose my job and can't pay my student loan?

I'm worried that I'll be laid off soon. I have huge student loans, and I know my unemployment check won't be big enough to make the payments and make ends meet. What should I do?--James C., NJ

Answer: You may be able to apply to have the payments on your student loans deferred until you can find another job. There are a few reasons that deferment will be granted, and unemployment or economic hardship is one of them. You'll still owe the balance, and interest may continue to add up depending on what type of student loan you have, but at least you can put off the monthly payments until you can get back to work.


This website provides responses to frequently asked questions about debt, interest, where to borrow if you have poor credit, how to improve your credit, where to get loans when you've suffered credit problems in the past, and other articles that I hope will be of some use to people who are looking for a way to meet emergency expenses, get out of a financial bind or work their way back to having good credit again.

--Pete Low

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