Covid-19 - Surviving Financially
Since March, the novel coronavirus has upended ‘normal life’ on a global scale. What any of us might have understood about pandemics, quarantines, and their impact on our lives is now an afterthought as financial markets, businesses large and small, and families…are facing a new normal that is unlike anything the world has experienced in generations. Compounding the problem, are governments—global, federal, and local, with myriad changing restrictions the for many—make surviving this disaster financially intact an ever diminishing possibility.
Economically speaking, the individual impacts, already daunting, could be just the beginning for our economy writ large, as industries, from hospitality to food service, from airlines to retail, continue to be interrupted. At the individual level, the primary impact is being laid off, forced to apply for unemployment, digging into savings and rainy day funds (if they existed) and ultimately being forced to look into options that never before entered the realm of possibility.
Unlike many scenarios, where recovery could be reasonably calculated, and industries were ‘paused’ but not indefinitely halted, Covid-19 appears to be coming back—with infections on the rise and America rapidly becoming the epicenter, with numerous breakout spots, and cogent government aid a question perhaps…but no certainty.
What to Do if You Have Been Laid Off:
As businesses contract or shutter, managers are forced to make the difficult decision to layoff employees en masse. With all but essential industries closed for lack of business or pursuant to government regulations, in the absence of money coming in, businesses must halt money going out and the result is layoffs. As the impact passes from the business to the individual, the result is no money to cover bills, debts going unpaid, and payments running behind.
Although state, local, and even the federal government have taken some steps to help reduce the financial impact (some creditors have as well) the unfortunate likelihood is that without a source of income—most Americans whose positions are being impacted by this crisis—will be forced to make difficult financial decisions. Add the uncertainty of reemerging infections, even with this relief it is important that every one begin taking steps to weather this storm.
Prioritize Bills
If your income is reduced, focusing what resources you have on essential payments and bills such as car payments, utilities, rents or mortgage payment is critical. While not paying bills is never a first option—bills such as credit cards should be not receive the same attention as essentials.
If you’re unable to cover essentials, reach out to your creditors. First, this will help to keep your phone from ringing off the hook. Second, many creditors are offering forbearance agreements or similar arrangements. By reaching out, you are being proactive and you are exerting control over the situation. As helpless as many are feeling—and with many in possession of little more than time—working solutions is a better option than most. Finally, creditors could begin limiting who they are able to help—by reaching out early, you have the best chance at a workable plan.
Another option is trying to negotiate with your creditors, either to reduce payments, or even to waive portions of your debt. While some may not be open to such strategies—many will—and asking won’t hurt. Banks, creditors, and even landlords right now are open to suggestions that ordinarily would end a conversation. The unprecedented nature of Covid-19 is opening new doors.
Bankruptcy
If you find youself ultimately unable to pay your bills, bankruptcy may be the best strategy for surviving this crisis and restoring your financial well being. Although the bankruptcy option is unpleasant, and even the word strikes terror in many, if this does become your only choice—the sooner you file, the sooner you will be able to begin along the road back to financial security. Your credit will certainly take a hit, but bankruptcy often provides an opportunity for staying in your home and wipes out the debt that has become insurmountable — from medical debt, to credit card balances, and even back rent.
How do I declare bankruptcy?
Because bankruptcy has many different complicated features, and there are also different types of bankruptcy—speaking with an attorney is an important first step. Before you stop paying your bills, or taking actions in anticipation of bankruptcy—it is crucial you determine whether you qualify. An attorney knowledgable in bankruptcy will be able to help and many are offering free consultations.
This is a difficult time for our world, our nation, our neighborhoods, our families, our friends…and ultimately each of us. While there is certainly an emotional toll that accompanies financial difficulties, and none would ever hope for such challenges, this should stop nobody from being proactive and working to solve problems as efficiently and effectively as possible. By taking appropriate steps during the pandemic—you are taking the first step toward being on the right path once the crisis lifts.