Ask Jean: Dealing with a Blemished Credit Report During a Job Search
Hi Jean,
Enjoy watching you on the Today Show. I trust you and would like your advice. A member of my family has credit card debt of about 20K and is unemployed, although has kept up with making the minimum pmt of about $300 a month. He is no longer able to make that pmt since he does not have UE funds coming in. He does have 6K in the bank and I believe he has a 401K, but drawing out of it is a part of his debt of about 10K, which he had to pay to the IRS with his credit card. He DOES NOT own a home. How should he go about consolidating his debt so he can get back on track until he finds a job. Should he consider bankruptcy? I wonder if that would affect his standing if prospective employers look at his background. Like many, he has a strong employment history in the tech field until he was laid off a couple of years ago. His finances and credit have always been very good with no problems. Would very much appreciate your advice and soon, if possible, as I believe he needs to take action.
Thank you very much.
– nchanting
Unfortunately, bankruptcy may be the right alternative for your relative. But before he goes that route, I want him to call a not-for-profit credit counseling service — he can find one at debtadvice.org. A good credit counselor will take him through an intake process where they look at how much he owes, what he owns, and the interest rates he’s paying. Then they’ll tell him whether they can consolidate all of his debts into a single payment at a low interest rate, whether that will save him money and how long it will take him to repay. It all really comes down to when he can find an job and start earning an income. Employers in this economy are used to seeing people who are having trouble making ends meet — what they respect is a person who has gone through the steps to deal with those problems rather than ignoring them. Your family member should be ready to explain why his credit report looks the way it does and how he is working to improve it.
