Dealing with Underemployment in Michigan

Unfortunately many Michigan families have seen a drop in their income due to a reduction in work hours or a decrease in their pay.  They may even be performing a job beneath their skill set due to a sluggish job market.  These circumstances are termed "underemployment".

The creation of many more part time jobs in the past two years has also made it difficult for families to maintain their income and standard of living.  According to the Labor Department (7/13), "the number of people working part time in the U.S. grew four-and-a-half times as fast as the number of full-time workers.  The share of all workers who mainly hold part-time jobs is at levels not seen since the early 1980s."  Economists cite several reasons for this trend, including:

• Technological change;
• Shifts in demographics;
• Economic worries;
• And the onset of the Affordable Care Act mandating insurance for full time workers.

Regardless of the reason, families must find a way to adjust their budgets to respond to the new American workplace.  Since our firm's main focus is debt resolution, we suggest being proactive about your finances.  If your income has decreased, you must decrease your spending, look for additional income sources or reorganize your debt load to bring it in line with your new monthly take-home pay. Here are some practical tips:

• Protect your finances.   Keep you secured debts up to date.  When there is a shortfall in income, it is often a quick fix to let a mortgage payment slip in an effort to maintain or juggle all of the other bills.  Often times other creditors are more aggressive about collections and so it is less stressful to skip a few months on the mortgage payment rather than paying demanding creditors.  This is not a long term solution and falling behind on a mortgage payment can cost you more in the long term with late fees, interest charges and legal fees tacked on.

If you determine that you can no longer afford the home due to an income reduction, deal with it immediately.  A foreclosure on your record makes it difficult to receive new credit in the future.

• Look for ways to reduce your secured debt.  There are practical ways to reduce the debt you owe on real property:
  • Seek a loan modification.
  • Remove a second mortgage or home equity loan with the use of a Chapter 13 reorganization.  At the completion of the program you will be responsible for paying only the first mortgage.
  • If your vehicle payment is a burden, explore selling it to trade-down to a less expensive used vehicle.
  • You also have the option to reduce the interest rate on your vehicle loan and potentially even reduce the balance of what you owe within the context of a Chapter 13 bankruptcy.

• Reduce or eliminate unsecured debts.  Right size your budget to your new economics and resolve your debts to keep your credit score moving in the right direction.  Options include:
  • Contact your creditors and negotiate a reduced interest rate on your credit cards debt or other loans.
  • Settle the debt for a reduced amount.
  • Eliminate all unsecured debts in a Chapter 7 bankruptcy for a fresh start.
  • Consolidate your bills under the court protection of Chapter 13 bankruptcy to reduce the debt you are paying back to fit your actual income.  All unpaid balances are eliminated at the completion of the 36 - 60 month program.

It is important to maintain your credit.  In many cases, bad credit could be a factor in prohibiting you from getting a better job in the future. To learn more about our Chapter 13 bankruptcy, Chapter 7 or Debt Settlement services, call today at 866-261-8282.  We offer free in-office or phone consultations and practical advice on how to best resolve your debts and move toward financial freedom.