Katrina Destroys The Financial House As Well
Hurricane's effect on money and credit to be felt for years
For Immediate Release: September 7, 2005
While the immediate physical property damage and loss of life is being felt in the areas surrounding Hurricane Katrina's path, the victims of this natural disaster will be feeling the effects for years to come. The cost of putting one's life back together is beyond the scope of most people's emergency savings and in this time of crisis it is vital to plan for physical, emotional and financial rebuilding.
"The property damage has been beyond belief but the damage to people's lives from this storm is yet to begin," said Steve Rhode, president of Myvesta, a nonprofit consumer education organization. "Many victims of this storm will not only face crippling property loss, but the resulting debts coupled with unemployment from this disaster will further drive many families into financial devastation."
Rhode offers these tips to those who have been severely impacted by the storm and out of work:
- Consider filing bankruptcy prior to October 17th when the new bankruptcy law goes into effect. Bankruptcy is a real and viable solution in a time of crisis such as this one. It will end much of the pressure you will have to face at a time when you are just struggling to make it from day-to-day.
- Evaluate your income potential in the months ahead. If you have lost your job you may be eligible for assistance programs. But before you actually receive any future financial assistance it is important to protect whatever cash you have right now.
- Do not use credit cards if you will not have any reasonable expectation to be able to repay them.
- Think about any critical bills that you need to pay right now, like insurance bills and medical insurance. Make those bills the highest priority and pay them first.
- Do not reduce your savings to pay bills you can't afford right now. If you owe $5,000 on a credit card but only have $1,000 in savings and no expectation of income, stop paying the card until you can guarantee new income. Draining your savings of $1,000 will not eliminate the debt, it will only leave you broke and unable to afford essential services.
"Hurricane Katrina was a financial tsunami and will drag many under for years to come," said Rhode. "Although these types of catastrophic events lead to financial and credit report damage that will last for many years, the damage can be repaired once you are back on your feet."
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MyvestaSM is dedicated to helping people create healthy financial lives. The organization provides a wide range of materials to inspire and inform people so that they can break down their barriers to financial and personal success. For more information visit Myvesta.org online.
