If your income has been disrupted by the recent big storm there are things you can do right away.
Generally, creditors are understanding in times of these major natural disasters. Their courtesy generally will extend to giving borrowers a few months of a payment holiday to get things regrouped. This payment holiday will most likely continue interest to be charged and will increase your balances owed, but it will keep your credit report clean and relieve you of having to make payments temporarily.
The financial storm created by a hurricane will extend far out from where the big blow made landfall. Not only are there millions of people not working at the moment after the storm leaves but businesses located in the storm area who used outside suppliers and contractors will not be calling on them.
Once you start to dry out and get in a safe and dry place, I want you to do this:
1. Get a Pen and Piece of Paper – You are going to need to make some telephone calls and it is imperative you keep a record of who you called and what they will agree to. Do not lose this paper.
I want you to write down the creditor you called, the telephone number, the date and time, and the person you spoke with. Also write down what temporary payment plan they put you on. The date, time, and number are especially important in case a recording needs to be later pulled to support your claim an allowance was made for you.
2. Pull Out Your Wallet – Take a look at your credit cards in your wallet. This is one of those times a credit card is going to be substantially more valuable than a debit card. Make a mental note which credit card has the largest available balance and prepare to use that card to get you through the weeks ahead. Don’t call them yet. We don’t want them putting a freeze on the card if you are going to need to use it. This is the true definition of the kind of emergency you have a credit card for.
For the credit cards you are not going to use, turn the card over, get the telephone number, and call those creditors to ask for a payment holiday or whatever they are calling their special storm deferment program.
3. Pull Out Your Memory – Start calling your car lender, mortgage company, student loan servicer, and other secured property lender. You will want to let them know as soon as possible that you’ve been impacted by the natural disaster. They may have a program in place to give you a payment holiday to prevent falling behind on your obligations. Don’t worry about the fact your property may be damaged and totaled at the moment. Just get payment holidays in place right away so you can take a deep breath to regroup.
4. Cash is King – Your resources will not be unlimited so don’t over commit to what you can’t afford. For example, don’t agree to make any payment that will lead to draining your cash or emergency saving balance to a dangerous level. It is better to be behind and miss a payment than it is to be broke and homeless.
5. Once You Are Safe We Can Come Up With a Plan – After you made the initial calls and wrote all that information down, just focus on slowing the drain on your cash, and getting your life stabilized so we know where you are going to live.
If you don’t have the cash to pay for something necessary, use that credit card you did not call but use it before cash but manage expenses wisely. You can deal with that later.
6. Options Exist – Your car may be totaled and your home blown away and your finances may be a total wreck as well after the storm clears. It’s not the end of the world. Legal options like bankruptcy specifically exist to give you a fresh start quickly and bankruptcy is there especially for situations like this. And don’t worry about your credit score, it’s easy to rebuild better than before.
Get out, get safe, regroup, and then move forward. It’s a winning plan to let you have a better future and reduce your stress as your develop your new post storm life.
Steve Rhode
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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.