Recovering Financially After a Divorce, Long Illness, or Unexpected Job Loss

Wed, Apr 29, 2015

Debt Mitigation

Some rights reserved by banjo dSo the worst has happened:  you’ve gotten divorced, become really ill or lost your job. Or a combination of the three. What can you do?

Of course, your next step depends on the extent of financial ruin you are facing. But it also may be mitigated by the amount of planning ahead you’ve done. None of us like to think about disastrous future events; worry alone can be detrimental to our mental health. However, there’s a difference between worry and planning ahead.

For instance, do a little deep thinking about where your finances stand when things are good, before the worst has happened. Are you almost under water now? Then you really need to try and get out of that hole. Start saving, paying off debts, preparing yourself in case of disaster. Even a little planning can be good.

Check out what type of health insurance you have. Is your health plan good? What does it cover? What are the limits? What are the deductibles? Have a professional analyze whether it’s the best plan for your specific needs financially and health wise.  Try to have at least the deductible saved if that is part of your plan.

Long-term and short-term disability insurance are other important types of insurance to consider. These can help by paying you a portion of your salary that you’re missing while being disabled. It’s also a type of insurance that considers pre-existing conditions, thus making it one that you want to get early in life or when you are able to avoid a waiting period, etc. A good time is when you first start a job.  You should check out the options even if you’ve already been employed someplace for a while or if you are concerned about something pre-existing, because you never know what may be available.

Saving can help you with all three of these disasters—and saving is never a bad idea. You want to store the money in an interest bearing account, and consider other types of short term investments too. A financial planner can help you with that. The only possible concern about saving is when a divorce occurs. Florida’s equitable distribution laws cause concerns about savings and how that money is divided, so consider all your options there. If this is of real concern, check with a divorce attorney for pre-nups, post-nups, or just to know how savings might be divided.

Often you are caught unexpectedly in one of these life disasters and you haven’t prepared. Then what do you do? First, take some mental health time to heal emotionally and physically. Don’t make rash decisions; try to think with a cool head. Assess the damage. Talk with financial professionals and other trusted advisors. Really take stock of the situation. If you can, try to talk to creditors yourself to see if they can lower the required payments on loans or other bills. See if you can work out a payment plan. Check with local agencies to see if they can offer help with food or utility bills. See what you qualify for.

If you are really financially strapped and you don’t think you will make it out alone, consult a bankruptcy attorney to see how it might work in your specific situation. Note we say specific situation—that’s because every situation is different. It’s not all one size fits all…some things are not dischargeable in a bankruptcy. And sometimes you don’t really qualify for a bankruptcy, even if you think you might.  An experienced bankruptcy firm like SmithLaw can help you discern the difference.

Attorney Christopher D. Smith, Sr. is designated a Board Certified Consumer Bankruptcy Lawyer by the American Board of Certification.  SmithLaw is located in Lakewood Ranch, Florida.  Attorney Smith concentrates on bankruptcy, civil litigation, probate, estate planning, and elder exploitation cases in the Sarasota and Bradenton area.  Call 941-202-2222 to learn more.  SmithLaw offers free consultations in certain areas, including consumer bankruptcy, probate, and personal injury matters.

Image: Some rights reserved by banjo d

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