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California Unemployment Budget – Pandemic Edition

I was trying to work out what an unemployment budget would look like in these times for, say, a family of four where one adult WAS working and got laid off in March. The other adult stayed at home to raise the two grade school aged children.

Here’s what I came up with:

One sample, hypothetical budget

Things would be tight under normal circumstances anyway. Pre-coronavirus pandemic, rent was $2,600, utilities run about $300, cell phone (including financing the devices) is about $195, etc.

Now that the “breadwinner” is laid off due to the pandemic, all kinds of things are different from a normal recession.

On the income side, things are a lot different from a typical unemployment cycle (rightfully so):

  • The CARES Act has a one time payment of about $3,400 ($1,200/adult + $500/child), possibly paid in April
  • Unemployment payments go from $450/week (maxed in California) to $1,050/week, let’s assume starting on the first week of April 2020 (might be a couple of weeks’ too optimistic)

On the expense side lots of things are very different, and let’s assume all the moratoriums and other changes extend all the way through June (BIG assumption, I know):

  • Our hypothetical family doesn’t have to pay rent or mortgages until June (but will have to catch up w/in six months of the emergency being lifted, which will blow this budget to pieces)
  • Utilities, normally $300/month, have been reduced (could be zero, but I keep some in in there), but they too will have to be caught up
  • Most (maybe not all) credit card payments are reduced temporarily, normally at least $500/month
  • Medical debt (many folks have it) payments drop for a while, normally about $180/month
  • Student loan payments go to zero for a while (normally, $400/month), let’s assume all the way through June even though that’s not what they announced
  • Netflix and Amazon Prime are practically mandatory in these solitary times, SO DO NOT TOUCH 😉

Other cash outflows stay pretty much the same.

I know we all have our unique numbers, but the stimulus combined with all the moratoriums, at least here in California, might make this survivable in the short term.

The economic quagmire comes later.

Longer term, we’re going to be saddled with a lot left over rent and new debt (almost 8,000 for rent in my hypothetical, which works out to $1,333 extra per month for six months) that’s going to be a drag on our economic growth, but seems like, if this only goes through mid summer we might make it…?

What did I miss?



Attorney advertising. Now and then I help people file for bankruptcy under the Bankruptcy Code, but I do a lot more than that for my clients. As such I qualify as a debt relief agency, which I’m proud to say. Michael Rice is responsible for the content. 840 Apollo Street, No. 100, El Segundo, CA 90254

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Updates

Mortgage Companies Offer Relief

This is a pretty interesting development that’s been taking shape over the past few weeks. In addition to some actions taken by cities, counties, and states to stop evictions and foreclosures, quite a large number of banks and financial institutions are taking voluntary steps to help folks out.

This is encouraging, especially compared to what happened during the Great Recession, where the mass foreclosures were a huge part what locked things up last time.

If all these companies and governments work together, we might actually be able to navigate our way out of this relatively quickly.

Wells Fargo, US Bank, Citi and JP Morgan Chase will defer mortgage payments for three months. State chartered banks and credit unions will offer similar deferrals. The banks also pledged not to initiate foreclosure sales or evictions for the next 60 days. And they promised not to report late payments to credit reporting agencies. Newsom said everyone is eligible, regardless of how much money they make. He said homeowners must submit “some form of documentation,” but did not give details.

Time.com

Wells Fargo

The bank said,

Wells Fargo is suspending residential property foreclosure sales, evictions and involuntary automobile repossessions. The company also is offering fee waivers, payment deferrals and other expanded assistance for credit card, auto, mortgage, small business and personal lending customers who contact the company. 

Wells Fargo Press Release March 20, 2020

US Bank

U.S. Bank has a comprehensive website on the pandemic, but said this about mortgages:

We are offering several customer assistance programs that may allow you to suspend mortgage payments for 90 days. If you are enrolled in this program, you will not be charged any late fees and your accounts will not be reported as delinquent during that time. If, after the initial 90 days, your hardship has still not been resolved, we will continue to work with you.

US Bank Statement captured March 28, 2020

Citi

Citi uses a mortgage servicer called Cenlar FSB and didn’t say much more than this–neither did Cenlar:

For eligible Mortgage Customers: A range of hardship programs through our service provider, Cenlar FSB. Please contact them at 1-855-839-6253 Monday-Friday 8:30am – 8pm ET and Saturday 8:30am – 5pm ET

March 28, 2020

Chase

I actually couldn’t find anything specifically written by JPMorgan Chase, but there’s a good CNBC article outlining how to contact them and outlines what other banks are doing too.

What does it mean legally?

This is kind of interesting too. The companies are changing their behaviors and policies for a while, but the lawyers and accountants are going to be busy trying to figure out how to document things to make sure everything comes together over time.


Get on my mailing list for the latest updates and free conference calls updating you on this fast moving situation!


Attorney advertising. Now and then I help people file for bankruptcy under the Bankruptcy Code, but I do a lot more than that for my clients. As such I qualify as a debt relief agency, which I’m proud to say. Michael Rice is responsible for the content. 840 Apollo Street, No. 100, El Segundo, CA 90254

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3.3 M Unemployed + $600/week

What a complete, unmitigated mess this pandemic is creating. Putting aside the health and lives that may be at risk for just a moment, the economic carnage is SWIFT, REAL, and IMMEDIATE. It feels like a bunch of clowns playing whack-a-mole with this, and you’re unemployed. I’m sorry for that.

Prior estimates warned, leading up to Thursday, that claims for last week AND this week, combined, may be as high as 2.25 million. Well they were wrong. By A LOT. In a single week, unemployment claims smashed estimates and obliterated the last highest record (I think set in the Great Recession) by FIVE TIMES. And that was just one week — not two.

Unemployment isn’t a “curve”; it’s real, and it’s here

Of course there’s a serious health crisis going on, but what gets lost in the headlines is that millions of you are paying a very high price, right now. It’s not some curve to be flattened for you. It’s not a mathematical model. You lost your job and you’re unemployed right now. How will you make rent? How will you feed your kids?

It’s not just the money that you lose. About six weeks ago, before all this happened, I was talking to a 50 year old guy who does (did) some of the light duty work around my cowering space (which is now closed).

He was so proud that they had recently let him run the closing shift. Not only was the traffic better on the LA freeways at night, but, more importantly, he knew meant management trusted him to take care of the facility (a multimillion dollar one) and to close everything up. That sense of pride and purpose is probably gone now, I guess, I don’t know. He got laid off so I can’t ask him.

But I do know there’s nothing to close at night because the coworking space didn’t open in the morning. It hasn’t in a couple of weeks.

What does he say to his family this weekend?

$600 extra per week

The massive bill that’s been working through Congress passed and Trump signed it today. There’s a lot to it. Stuff to make some bankruptcies easier, forgivable loans for small businesses, help for some big businesses, especially airlines.

But, aside from one time cash payments that I’ll try to explore soon, maybe the more important aspect is that you can get an extra $600/week ON TOP OF whatever your current unemployment is.

So if you were getting, say, $275/week, now you get $875 per week, which is a big increase!

As I understand it, it should last through late July. But I’m still trying to understand.

It literally just became law today, so it will probably take California EDD at least a few weeks to process it, at which I would guess, they may make catch up payments since I think you might be eligible starting next week.

Here’s the key part of Section 2104 of the “CARES Act”:

And here are some other places to read some more details:

More to come this weekend, rebooters!


By the way, here’s the full text of the CARES Act:


Attorney advertising. Now and then I help people file for bankruptcy under the Bankruptcy Code, but I do a lot more than that for my clients. As such I qualify as a debt relief agency, which I’m proud to say. Michael Rice is responsible for the content. 840 Apollo Street, No. 100, El Segundo, CA 90254

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Hermosa Beach Eviction Moratorium

In tonight’s post, we’re taking a look at Hermosa Beach, CA’s eviction moratorium. I know HB is a teeny, tiny city in the South Bay bubble and I just featured it in my last post about beach closures, but I’m guessing it’s a common order that’s getting passed around by city attorneys.

Finally, since I live here, I have easy access to the order. Remind me and I’ll dig around to the other Los Angeles area cities to see what their orders say. Our city attorney also represents West Hollywood, so my guess is that theirs looks similar.

Remember that normally, during normal times, the cities and counties aren’t allowed to stop evictions or foreclosures. That’s something that only the State can do. But recently, the Governor issued an order clearing the way for local cities to temporarily make their own choices about evictions and foreclosures.

Landlord restrictions and duties:

The order has a list of things that your landlord cannot do.

  1. Landlords cannot “endeavor to evict” you for not paying rent if you demonstrate you are “unable to pay rent due to financial impacts related to COVID-19.” See below for more about what “financial impact” means.
  2. The landlord cannot serve notice, take you to court for unlawful detainer, or “otherwise” take actions if the landlord “knows that [you] cannot pay some or all of the rent” due to the coronavirus. (E.g., you need to let them know!)
  3. When you provide documentation about your inability to pay (see below), the landlord must hold your information “in confidence” and can only use the information for “evaluating the tenant’s claim.”

Your/tenant’s duties:

You can’t simply stop paying rent without contacting the landlord.

In fact, you have 30 days from the date that the rent was due to provide “documentation or explanation” as to why you can’t make rent. For many, April rent is due in just a few days, on April 1, so you only have until April 30 to contact your landlord and provide proof.

If you’re going to miss your rent payment, you should to contact your landlord before thirty days!

What does “financially impacted” mean?

In case you missed the news, over three million people lost their jobs JUST LAST WEEK over this pandemic. That’s clearly a financial impact, but the Hermosa Beach order has some detail.

The eviction moratorium applies to you as a renter if you were financially impacted in any of the following ways:

  1. You were sick from the virus
  2. You were caring for a family member
  3. You were laid off, lost hours, or otherwise lost income, such as, because your employer closed
  4. You had extraordinary out of pocket expenses
  5. You had additional child care needs because of school closures
  6. You lost income because you were complying with recommendation from a health authority to self-quarantine

Number 6 is something I’d recommend you document carefully because it’s the one with the “fuzziest” parameters around it.

Do I have to make up the unpaid rent?

YES. And this is the unfortunate and unstated part of the mess and the “bailout” that people don’t talk about: sure, you’re getting some temporary relief, but it’s really more of a loan.

Once things get back to normal, you have to make it up. There’s no free rent.

That said, here are the conditions:

  1. You have six months from the time that the city council declares the emergency is over to catch up on the rent you couldn’t pay due to the pandemic.
  2. Landlords can’t charge fees.
  3. They can’t, after six months (assuming you caught up), claim you didn’t pay rent during the moratorium to evict you.
  4. But there are no other restrictions, so the landlord can still report to a credit agency or other source that you missed rent.

Homeowner “protections”

Those who own homes get some protections too, but not as many.

The Hermosa Beach order says the mortgage service can’t start a foreclosure action, that the property owner has six months to catch up on payments and that late fees can’t be collected, but otherwise all bets are off when the local emergency ends. The lender and borrower and are left to sort it out in court at that time.

For the record, I’m writing all this with the assumption that the cities, counties, and the State have the power to do what they’re doing. My hunch is that they are overstepping their legal authority in some cases, but that will take many months or years to shake out.


Attorney advertising. Now and then I help people file for bankruptcy under the Bankruptcy Code, but I do a lot more than that for my clients. As such I qualify as a debt relief agency, which I’m proud to say. Michael Rice is responsible for the content. 840 Apollo Street, No. 100, El Segundo, CA 90254

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Updates

Hermosa Beach Closes the Beach

Up until today, I was saying to myself, “Well, you know, the beach is always free and easy to social distance. Pack yourself a sandwich and some water, grab a book, some water, and you’ve got a free and awesome day in LA, even if you are unemployed for a while.”

Well my own little one+ square mile city, Hermosa Beach, just put an end to that, and I think it’s the first or only Los Angeles County beach to do so. They also closed The Strand, which is going to create a mess of traffic on roads not truly equipped for bike traffic.

Of course, the main argument was that there were too many crowds at the beach, but I was there. It didn’t seem like people were having problems with social distancing on the super wide beach, it was mostly family groupings since the South Bay is super family friendly. Sure you could argue that hanging out on the beach in the first place was a violation of the “better at home orders,” I get that.

Saturday, March 21, 2020 in Hermosa Beach

Here was the key part of the alert from the City that I received in my inbox today, which feels both punitive and unsubstantiated:

These [outings] increased the risk of spreading the novel coronavirus (COVID-19) because people were unable to maintain the required distance of at least six feet from non-household members. Public health experts also warned that the risk of COVID-19 transmission increases exponentially in crowds and the virus can remain on surfaces, such as benches and handrails, for up to 72 hours.

From a “COVID-19 alert” from the City of Hermosa Beach

I know it’s important to protect public health, and I’m not arguing we shouldn’t. What I am concerned about is that

  1. I didn’t get any notice of any hearing or due process
  2. the notice and press release were thin on facts
  3. there’s no explanation why Hermosa needs to move faster than Los Angeles County
  4. with regard to The Strand, there’s no balancing of concerns for bike and pedestrian traffic diverted from The Strand to the busy city streets, especially as traffic turns distinctly warm next week

In case you’re wondering why Hermosa Beach is the only city to do this, it’s because Hermosa actually owns the sand, whereas most (all?) of the other LA County beaches are actually controlled by the County, so the City seems to believe it can take these actions despite the procedural and substantive concerns I raised.

UPDATES: March 26 – Redondo Beach, Hermosa’s neighbor to the south, just closed “access” to its beaches as well. So maybe, it’s acceptable to be on the beach if you swam there or walked in from the Torrance beac?


Attorney advertising. Now and then I help people file for bankruptcy under the Bankruptcy Code, but I do a lot more than that for my clients. As such I qualify as a debt relief agency, which I’m proud to say. Michael Rice is responsible for the content. 840 Apollo Street, No. 100, El Segundo, CA 90254

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Hope Updates

Current Status

In today’s post, I’m going to do a quick round up of where things are with efforts to mitigate the economic impact of the pandemic. The big legal news over the past 24-48 hours is whether Congress will pass the huge bill I mentioned earlier. The idea behind this is to put a lot of cash and financial support into the economy to keep things afloat.

The stock market jumped 11% today because investors think it might pass, and late tonight it sounds like lawmakers reached a deal, so it should pass soon. Let’s hope $2 trillion is enough! Will definitely need to write a lot more about this tomorrow.

The other big looming news that I’m watching nervously to see what happens on Thursday. The government counts up all the unemployment claims from the states and then releases the number early afternoon on Thursday. Some are expecting as many as 2.25 MILLION newly unemployed people over last week and this week. That would be breathtaking.

Finally, and this just came out tonight, LA’s Mayor, Garcetti, announced that he would shut off the water to nonessential businesses that refuse to close, saying the peak in cases here in LA is about 6-12 days away. This is a very bold move, and I have a feeling there are going to be a lot of arguments about whether he can or can’t legally do that, but it won’t matter in the short term.

More about what you can and can’t do right now

Lots of conversation these days here in the LA area about what it means to “stay in place.”

The weather is turning nicer than usual, so this weekend I noticed a lot people were at the beach, including me to be honest. On the sand, anyway, it felt like people were staying pretty far apart. My family was. On the sidewalks leading to it, not so much, which is maybe why a lot of the cities are closing the parking lots near the beaches. I think San Diego County closed all the beaches.

It seems to me that if you’re getting some exercise at the beach, then that should be permitted. If you’re throwing a party with your friends around a bonfire at Dockweiler, that should not be.

I have a bad feeling if people keep flouting the rules, there will be pressure to lock down tighter. If you break the “safer at home” orders, then the police could charge you with a felony, but I don’t think they’re at that point yet.

This post on LA Curbed is a fairly useful summary: Coronavirus Los Angeles: What’s closed, where you can go

The latest on mortgage payments

Up until this pandemic hit, if you couldn’t make your mortgage payment, then the bank could eventually foreclose on your house. Over the past couple of weeks, however, the federal government has “suspended” forecloses.

That’s good, especially if you’re unemployed, can’t readily get a new job, and unemployment benefits aren’t enough to cover you.

However, the way the foreclosure suspension actually works for you will vary depending on what kind of loan you have. If your loan is backed by Fannie Mae, Freddie Mac, FHA, VA, or Rural Home Services, then click on the link for the details.

If your mortgage is not back by those agencies, then the Federal Reserve gave some helpful guidance to your mortgage company (they call them “mortgage services”) on some technical details about how to work with you.

Keep in mind that, even if you get a temporary break on your mortgage during this pandemic, it’s likely that you will have to make up the lost payments somehow, eventually. That’s the way they did it during the Great Recession.

You might not be sure what kind of loan you have. I’ll try to go into some more detail soon!

What about rent?

Sixty percent of rent in California. With rent, an eviction usually happens more quickly than a foreclosure. The State of California did something kind of interesting to suspend or slow them down during the pandemic.

On March 16, Governor Newsome basically told the cities that they could restrict evictions if they want to and if your landlord is trying to evict you because you lost income or your expenses increased. Put differently, my read is that people who aren’t being financially impacted by this can’t simply decide they aren’t going to pay April’s rent.

As of my last look, the Governor’s Order expires at the end of March, but I would he would surely expand it, as would the cities.

Student loans

Unlike evictions, it sounds like EVERYONE with a Federal student loan will automatically get 60 days interest free on their loan. EVERYONE can suspend payments for two months to keep a little more cash in their pocket, but there are some reasons why some of you might not want to do it.

The announcement came out March 20, but it’s retroactive to March 13.

CHECK THOSE AUTO PAYMENTS FOLKS—especially with a new month just around the corner!!!

Details here: Coronavirus and Forbearance Info for Students, Borrowers, and Parents

Utility payments

The telecom companies have promised not to terminate your service if the effects of the pandemic prevent you from being able to keep up with your payments.

In California, most (maybe all) utilities won’t be disconnected if you can’t pay. This gets a little complex if the utility service is being run by a county or city in California, but I would think almost all of them, by now, are following the same policy.

Southern California Edison and Pacific Gas and Electric are following the same policy.

Robocalls

I know, I know–you don’t care about robocalls right now! I just thought this would be a random legal “thing” you wouldn’t expect from a pandemic.

Remember robocalls, one of the other things that our shared hatred of united before coronavirus? Well the F.C.C. just gave hospitals and healthcare provides permission to go ahead and robocall and text you about health alerts for a bit. Makes sense.


On the bright side

It seems like New York City is entering the darkest hours of the pandemic right now, and Garcetti said Los Angeles would be doing the same over the next six to twelve days.

That sounds scary to be so close to the peak, but I want to reflect on it for a second. While this could go on for a while after it peaks, I for one am ready to get the darkest days behind us.

Not to trivialize the pandemic, but I hate December 21 because it’s the darkest day of the year. The days leading up to it and following it are pretty dark too, but at least, on December 22, the days start getting just a few minutes longer each day.

We’re almost there 🙂

Stay safe!


Attorney advertising. Now and then I help people file for bankruptcy under the Bankruptcy Code, but I do a lot more than that for my clients. As such I qualify as a debt relief agency, which I’m proud to say. Michael Rice is responsible for the content. 840 Apollo Street, No. 100, El Segundo, CA 90254

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What Is Congress Debating?

As I write this, the United States Congress is currently debating how to address the financial effects of the coronavirus pandemic. The bill that the Congress is working through is over 600 pages long.

I thought you’d be interested in some of the highlights that apply to you:

  • If you work for a small business, there would be $300 billion in new loans available for payroll and money they would need to keep the lights on.
  • The California unemployment program is backed by the federal government, and Congress is debating how to increase the number of people who can get it and how much or how long, which is particularly important right now.
  • They may issue cash checks of $1,200 per adult and $500 per child for most people who make less than $200k/year.
  • Student loans might get six months of interest free deferment. In other words, you wouldn’t have to pay for six months. However, there are some wrinkles around Perkins Loans or private loans (of course 👎).

In case you’re curious, big businesses would get some big benefits too. $50 billion for airlines, and $435 billion for some other big businesses.

Under the current bill, there is not an increase in SNAP or other Social Security programs.

These are just some hot take notes. Nothing is final yet, but I thought you’d be curious to know what Congress is debating right now.

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Uncategorized

City Council Freakout

I thought this was fantastic from Lake Worth Beach, Florida.

I don’t know the details of how this came up, but it certainly does seem like a bad time to be shutting off people’s utilities!

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Guides

60 Day Break on Student Loans

Here’s some good news in a sea of panic and scary news. The U.S. Department of Education told student loan servicer to suspend payments on student loans for two months. It’s not automatic though. Read on for how to deal make the most of it.

Before we start

Before we start, if you’re on automatic deductions for your student loan payment, check your payment date!!! As part of my unemployment survival guide, I told you to check your automatic payment dates and stop them right away if possible.

Whatever the date is, make sure you contact your student loan servicer before that date so you don’t get hit with a payment you don’t have to make during this temporary freeze. If the normal payment is the 24th, make the call now or get online. I don’t care how long you have sit on hold or how slow the website is.

When you talk to them, they’ll most likely explain what of what I’m telling you.

Remember: CASH IS KING when you’re surviving unemployment.

That said, let’s get on to some more details about what’s going on.

60 Day Stop on Student Loan Payments

Just yesterday, the United Stated Department of Education announced two key things:

  1. The stopped any new interest charges from being added to your loan for at least 60 days
  2. You have the option to not pay for at least 60 days

If you’re unemployed or getting impacted by the sudden economic downturn, the first point probably isn’t a huge deal. But it’s nice to know that, at least in the long term, you’re saving a little money. The government set your interest rate to zero temporarily, which is nice.

The second point is much more important if you’re suddenly unemployed or struggling to bring in money.

“Right now, everyone should be focused on staying safe and healthy, not worrying about their student loan balance growing. I commend President Trump for his quick action on this issue, and I hope it provides meaningful help and peace of mind to those in need.”

Betsy DeVos

How to stop your student loan payments

During this unfortunate phase we’re going though, anyone who requests an “administrative forbearance” can get one for at least 60 days, which is probably two student loan payments for most of us. Forbearance means you don’t have to pay for a short period of time.

To get it, you have to take action. The payments don’t automatically stop (which is part of why I wanted to mention that you MUST check your auto payments and get in front of it). Use this link to find your student loan servicer and contact them.

To get stop your loan payments for a while, contact your loan servicer. The loan servicer is whoever you make your payment to. Mine, for example, go to Navient.

There are some details

Read these notes while you’re waiting on hold or waiting for that website to load!

If you’re seeking a Public Service Loan Forgiveness, you may want to continue making payments, if you can.

Also, if you’re on an income-based repayment plan, there might be some wrinkles. For example, your payment may have, effectively, been reduced to zero. I think you can probably keep up with that payment. Talk to your servicer to see what their point of view is.

If you’re currently 31 days delinquent on your student loan, then you automatically get the 60 day forbearance. I’m a bit unclear on how this works out… does this mean you effectively get to skip three payments? You might have to double up on a payment to catch up, eventually, but I’m honestly unclear as I write this. If you’re waiting on hold with your servicer, you might as well stay on hold and confirm whether you’re in the 31 day period and what happens after 60 days, if they know.

The suspension of interest charges started on March 13, 2020.

The Department of Education has a pretty good list of frequently asked questions you should review too. Some of their questions might help you with your specific issue.

What about private student loans?

Private student loans don’t get the same protections that federal student loans get, unfortunately. Still, everyone knows what’s going on, and they should be flexible with your loans. Reach out to them to see what your options are.

I tried to check Sallie Mae this weekend, for example, but the website was DOWN. Probably not a surprise under the times.


Things are moving fast. Get on my email list so I can give you the latest, fast breaking updates!


Attorney advertising. Now and then I help people file for bankruptcy under the Bankruptcy Code, but I do a lot more than that for my clients. As such I qualify as a debt relief agency, which I’m proud to say. Michael Rice is responsible for the content. 840 Apollo Street, No. 100, El Segundo, CA 90254

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Guides

Unemployed? How to Survive

A whole bunch of us, maybe 2 million people in America (we’re still waiting for the numbers), are suddenly unemployed or had our hours reduced to the point where we’re basically out of a job. That includes many in Los Angeles.

I wrote this because I was in the trenches helping people just like you during the Great Recession through clinical programs and lots of hands on experience helping everyday working people, like you. These are some of the unemployment survival techniques I learned from 2008 to 2010.

UPDATE (Mar 29): Unemployment budget for the pandemic. Check my math, but it seems like it could be good news.

DON’T PANIC!

This could turn out to be a short-term, temporary downturn. We’ll see. Let’s hope. Even it’s short, it’s going to be (very) hard for a little while. But don’t panic.

In this guide, there are a bunch of things you should do right away, broken up by topics like money, rent and mortgages, debts, unemployment, friends and relatives, etc.

Before you start reading, you should know that these actions bring some legal implications with them. Don’t take what you read here as legal advice because I don’t know your specific situation. Take these as suggestions–not specific advice.

How long do you have to go?

I wrote this guide to try to help in the short term. These are not sustainable techniques for how to live long term or even for four months!

The idea behind this post is that you might have to survive for the next two to three months without a job and with little money coming in, if any.

I’m hoping that we get out of this mess sometime in the summer. (Don’t get consumed in the doom and gloom right now. Focus on what you can do!!!)

Money

☑️ Get serious about the money you’ve got and what sources are available to you in the short term. If you’re like most of us in Los Angeles, you probably don’t have much in the bank. Still, pull everything you can together and treat it like gold. It’s the only resource you can’t make more of in the short term.

☑️ Make an emergency budget of all the stuff you absolutely need to live for a few months? It doesn’t have to be fancy. Write it on the back of an envelope from some old medical bill if you need to 😈 (I’ll make an emergency budget form and send it out to you if you’re on my email list.)

☑️ Your budget is probably more than you have the cash or unemployment income for. So keep reading this guide for ways to survive.

☑️ Believe it or not, the U.S. Government might be issuing cash checks to help out in the next few weeks, somewhere between $1,000 and $2,000 per adult, but it hasn’t been sorted out yet. Get on my email list for immediate updates!

☑️ If you think you can get a tax refund from last year’s taxes, file it soon! (If you haven’t already done it.)

While the checks from the government might help a bit, they’re not going to go far if you live in Los Angeles, or pretty much any big city. I’ll try to keep you up to date on what’s going on with this as quickly as I can.

Unemployment

Applying for unemployment insurance might help your budget. In California, you’re going to contact EDD, Employment Development Department. As I write this, the EDD is getting slammed with requests. The week before last, they had about 58,000 claims, I bet it’s 10 times that number last week (March 16).

☑️ Get copies of your paystubs! Make sure you have these for getting the most you’re eligible for when file for unemployment. This is fairly urgent because, with things being as they are, many employers are shutting their doors. If you’re able to get them through another service like ADP, you might be in better shape. But get as many copies as you can as soon as you can.

☑️ Learn about unemployment insurance (“UI”), if you’re eligible, it can pay you a few hundred dollars per week, somewhere between $40 and $450, depending on how much you were making before. It’s not much, but your cash is critical.

☑️ File a UI claim with EDD immediately. There are two sites: one for your laptop computer and one for your phone. Whatever you’re reading this on, use that link.

☑️ Don’t go to the EDD offices because they’re all closed do to the pandemic. You have to file online.

☑️ Not everyone gets unemployment, which is kind of a mess – to say the least. Soon, I’ll post more details on what this means and what to do if they deny your claim.

You might have heard that the unemployment insurance offices are struggling to handle all the claims. You’re right, they are. They are also running low on money. But don’t panic. Those offices and their money are backed by the State of California and even the U.S. Government, so we’ll find the money!

Other public benefits

There are a whole bunch of other options you should consider. Usually people call these “welfare” and I know some of you might feel embarrassed going to the store and using something like SNAP, but remember cash is king. If it can stretch out how long you can make it, then use it.

And besides, there hasn’t been a moment like this where so many of us are going through the same experience, so don’t worry about judgment or shame.

Unfortunately, this is one of the areas I know the very least about. I’ll come back once I learn more about them and have something more intelligent to say.

Housing

If you work out your budget (from above), and it’s clear that you’re going to have trouble making rent (April’s rent is due for many of us in just a few days!!) consider this:

☑️ Talk to your landlord or mortgage company. Just because you heard something in the news don’t simply stop making payments. At least not yet. First, contact your landlord or mortgage company and let them know about the emergency situation. Literally nobody in America will be surprised by what happened to you.

☑️ There are a lot of legal things going on right now to try to help you with your mortgage or rent, including a temporary ban on evictions and foreclosures (I will write more on this soon), but make sure you talk to your landlord or bank.

After food, housing is the most important thing you need to protect. Make it your top priority, and don’t try to play hardball with your landlords based on what you’ve read in the news right now. They all know what’s going on too and can’t afford to lose tenants any more than you can afford to lose housing.

Bills

Go back and take a look at that budget I told you to write. On that list, what are the most important bills?

☑️ Know this: obviously utilities like electricity, water, and gas seem like the most important. And they are. However, they are often the most flexible in terms of making payments and are usually prohibited from simply disconnecting your service, at least the short term.

☑️ So it might sound strange, but core bills like utilities (not rent!) may be the ones that you can delay in the short-term–but not forever, obviously. Remember, I’m trying to help you get through the next few months.

☑️ Internet service is even more important than it was during the Great Recession, and often doesn’t get the same kind of protection (well sometimes it does; it’s a little complicated), so you might need to make this an important priority in your list of bills.

☑️ Phone service (cellular) has become a critical thing for most of us. Still, odds are that you’re probably paying way too much for it. Call your provider and see if you can scale down to a bare bones plan. You don’t need to be uploading Tik Tocs all day right now.

☑️ Seriously slash anything you think you can live without for the next two to three months. This might be a great time to go through all those subscriptions you signed up for on your iPhone and Android. Do you really need cable TV? You know you’ve been meaning to cancel some of these unneeded things anyway.

☑️ Things like Netflix are not extravagantly expensive and might help you get through your days a bit over the next few months. But be real with yourself about everything else.

☑️ Think about how you’re paying for bills. As a bankruptcy lawyer, I can’t advise you to incur more debt leading up to a bankruptcy by paying for all your bills on credit cards (and I’m not saying this is where you’re going), but when you’re unemployed, you may need to turn to credit to get you through. Treat cash as something you can’t get back for a few months.

Again, can’t say it enough: this is a survival plan. Not a good way to live long term!!

Debt like credit cards and student loans

Debt has to be paid for with cash. So we need to treat this carefully and try to get creative.

☑️ Paying debt by incurring more–like cash advancing credit cards or going to payday loan lenders–might seem like something you have to do. It’s obviously a really bad idea. The better idea is to contact your credit card companies and let them know what’s going on and ask for help.

☑️ Almost every lender in the country announced they’re willing to help you postpone or reduce payments in the short term. It almost un-American to not try to help you, if you ask me. So contact them and see if you can postpone for a while before making a payment!!!

☑️ CHECK AUTOPAYMENTS!!! You might already have scheduled payments. Stop those immediately because they are going to hit your cash. This could be credit card payments, loan payments, whatever. STOP THEM IF YOU CAN.

☑️ Contact your student loan lenders. Most of them are federally backed and they are usually really flexible about suspending payments. If your student loans are federally backed, you can skip at least 60 days of payments and stop interest from accruing due to the pandemic. Read my update on the temporary 60 day stop on student loans for more.

Taxes

It’s crazy, but tax filings are going to be due in just a few weeks.

☑️ Taxes are due when they’re due, that’s the law, but keep in mind that the Internal Revenue Service is one of the laziest creditors around. (They’re also the fiercest, but it takes them a while to come around)

☑️ The government is likely pushing out the due date for taxes anyway, so stay tuned for more on this! (Subscribe to my list.)

Stay tuned for more on taxes!

Don’t rush to bankruptcy

Just because you’re unemployed doesn’t mean you need to file for bankruptcy. In fact, this might actually be the worst time to file for it, depending on your circumstances.

The best time to file for bankruptcy is when you’ve pretty much hit rock bottom, your situation is stable and projected to improve in the future, and need all the protections it provides. (I’ll post an article explaining soon.)

For some of you, who are entering this unprecedented phase with little cash and a lot debt, bankruptcy might make a ton of sense later in the year to emerge from this pandemic stronger than ever, but for many it’s too early for that.

More updates coming!

I first wrote this quickly on Saturday morning, March 21. I’ll keep revising it over the next few weeks.

Please do consider getting on my email list so I send you more updates and important alerts as they come. It’s not like you’re going to come back to this list every day, so get on the list so the updates come straight to you.

Good luck out there. Remember we’re going to get through this. I hope I can help you!!


Attorney advertising. Now and then I help people file for bankruptcy under the Bankruptcy Code, but I do a lot more than that for my clients. As such I qualify as a debt relief agency, which I’m proud to say. Michael Rice is responsible for the content. 840 Apollo Street, No. 100, El Segundo, CA 90254