|Image courtesy of Ambro
I think about those families that are just on the edge of becoming financially healthy. The economy was growing and the job rates showed signs of joblessness dropping across all communities. Now, faced with the uncertainty of the effect on the economy; schools and daycare closed in my state; the temporary loss of income; and the dramatic loss in the markets, I sense there will be a renewed sense of desperation among families who are on the financial edge.
If a person was struggling financially before this pandemic, it probably isn't going to get better during this crisis. If people felt themselves climbing out of a hole, they may feel their progress is starting to stall. Don't let this crisis take all you have earned over the last few years. This may be the time to consider (or reconsider) filing for bankruptcy protection.
During the time of financial crisis, many people reach into their retirement accounts to make ends meet. Most times, emptying a 401(k) plan is not the answer. I work with people who spent down their retirements funds or never saved and now are trying to live on Social Security alone. Considering how many clients I have filing for bankruptcy whose only income is social security, I cannot stress it enough, I believe people should file for bankruptcy before using retirement money for debts. In most case, retirement accounts are protected in bankruptcy.
During this time, people need to examine their budget. I recommend people prioritize payments. People need a place to live. If a person does not want to move, I would argue rent or mortgage holds the highest priority. Not only do people need a place to live, rent or mortgage is usually their largest bill making it harder to catch up after missing one, two or three payments.
After paying for your home, utilities, food. car, and transportation are competing for your money. These may not be everyone's priorities but, I would argue, everyone should review their payments and set their priorities. Skipping important payments to pay lesser bills can make a bad situation worse.
If a person cannot make ends meet after taking these steps, this may be the time to consider bankruptcy. Think about it as part of your crisis plan. This can be part of the actions to keep a family financially healthy during this global pandemic.
If you want assistance, legal representation, or just want to know more about me, Mark M. Medvesky, or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at www.whhmlaw.com.
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