What To Do When Your Unemployment Checks Stop Coming?

By Tisha Tolar, on April 6, 2011

You’ve learned to live off of your unemployment benefits. You’ve cut your budget and are finally starting to make some progress in the new job market. Right when all seems to be going well, the rules change. It is expected that many more states will start the process of cutting back on the unemployment benefits they are issuing to their unemployed residents.

The bottom line is many states are broke. Cutting back on unemployment helps solve a portion of this immediate financial problem. In addition to saving a state budget funds, the cuts are being considered because of the unemployment taxes companies have to pay. The hope is that if business taxes can be decreased, more companies would begin to hire new employees.

Changes Are Coming

States across the nation are inundated with claims for unemployment benefits since the recession came about. Employers were quick to downsize to keep the company afloat, leaving many in the lurch without reliable income or the prospects of finding a new job immediately. The unemployment trust funds set up in each state took a serious beating, prompting some to take a loan from the federal government in order to meet the demand for covering eligible benefit distributions to those without jobs.

The states of Florida and Arkansas are currently looking at reducing the number of weeks unemployed workers can receive benefits. Florida’s legislature has proposed cutting the benefit receipt time by 6 weeks. Indiana has been working to reduce the number of jobless that are eligible to receive benefits in the first place. Govenor of Indiana Mitch Daniels recently signed into law a bill that limits eligibility for unemployment benefits. The law also changes the way payments are calculated and these changes will start in July 2012. There are a total of 32 states which still owe monies back to a federal unemployment fund. For now, the total owed is estimated at $45.7 billion and states are expected to repay about $1.4 billion back in interest.

This is not the first time states have had to borrow federal funds and make cuts to unemployment benefits. It happened in the 1980s when a recession forced states to borrow $28 billion to meet the unemployment benefits needs for laid-off workers. During that time 40 of the 50 states made changes to the way money was distributed for unemployment, even going as far as changing up the eligibility guidelines for workers.

How to Prepare for Benefit Cuts

Above all you need to get off unemployment benefits. Even with multiple Congressional extensions they will eventually run out. Aside from that, the best thing you can do now if you are worried about cuts and changes to your unemployment benefits is be proactive about learning the facts. Follow the news in your state about the impending changes on benefits guidelines so you know what to expect.

You should also look at the big picture and work to save enough cash as you can while you look for work. It may not be easy to get by even with the benefits you are now receiving, but planning budget cuts of your own is a good start.

Brush up on old skills or learn new ones as you continue to look for a new job. There are often community accessible courses where you can learn new skills and improve your existing knowledge. Many of the unemployment departments in your state will either already require some job polishing efforts by recipients and often have resources available for free that can help spice up your resume. You will also be able to find opportunities to seek work through the unemployment office in your state.

Most changes will not be immediate but it is important to plan for the inevitable, especially if you have gone a while without securing a new source of income.

The Obama administration said Wednesday that it will provide additional support to help unemployed homeowners through two targeted foreclosure-prevention programs.

 

Through the existing Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets, the U.S. Treasury will make $2 billion of additional assistance available to housing finance agencies (HFAs) in 17 states and the District of Columbia to implement local programs for homeowners struggling to make their mortgage payments due to unemployment.

In addition, HUD is planning to launch a complementary $1 billion Emergency Homeowners Loan Program to provide assistance – for up to 24 months – to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.

Hardest Hit Fund

President Obama first announced the Hardest Hit Fund in February 2010 to allow states hit hard by the economic downturn to design and implement their own programs to meet the local challenges homeowners in their state are facing.

Under the program, $1.5 billion was sent in late June to five states where housing market conditions have deteriorated due to steep plunges in home prices. Another $600 million was awarded in early August to five other states where local unemployment rates are above 12 percent.

The additional $2 billion in assistance announced Wednesday has been earmarked for states that have experienced an unemployment rate at or above the national average for the past 12 months. Each state will use the funds for unemployment programs that provide temporary assistance to help homeowners pay their mortgage while they seek re-employment, additional employment, or undertake job training.

States that have already received money under the Hardest Hit Fund may use the additional resources to support their existing unemployment programs or they may opt to implement a new program. States that are new to the grant list must submit proposals to Treasury by September 1. Assistant Treasury Secretary Herb Allison said final approval for new programs will be made by October 3, in order to ensure program roll-outs during the fall season.

The states eligible to receive funds through this additional assistance include:

• Alabama – $60,672,471
• California – $476,257,070
• Florida – $238,864,755
• Georgia – $126,650,987
• Illinois – $166,352,726
• Indiana – $82,762,859
• Kentucky – $55,588,050
• Michigan – $128,461,559
• Mississippi – $38,036,950
• Nevada – $34,056,581
• New Jersey – $112,200,638
• North Carolina – $120,874,221
• Ohio – $148,728,864
• Oregon – $49,294,215
• Rhode Island – $13,570,770
• South Carolina – $58,772,347
• Tennessee – $81,128,260
• Washington, D.C. – $7,726,678

HUD Emergency Homeowners Loan Program

This new program will provide assistance to homeowners in areas that may not be included in the Treasury’s Hardest Hit Fund program. HUD says it will announce additional details, including the targeted areas, when the program is officially launched within the next month.

The $1 billion for the HUD program was made available through the Dodd-Frank Reform Act, and is modeled after the Homeowners’ Emergency Mortgage Assistance Act in Pennsylvania, introduced by Rep. Chaka Fattah (D-Pennsylvania).

Bill Apgar, HUD’s senior advisor for mortgage finance, explained that the program will work through a variety of state and non-profit entities to offer a declining balance, deferred payment “bridge loan” of up to $50,000 per eligible borrower, which can be used to make payments on their mortgage, property taxes, and insurance for up to 24 months.

Eligible borrowers must be at least three months delinquent and have a reasonable likelihood of resuming repayment of their mortgage and related housing expenses within two years. The property must be their primary residence and the borrower cannot own a second home. They must also demonstrate a good payment record prior to the event that resulted in their reduction of income.