When you’re injured and your income and savings slip away faster than you’re recovering, take steps to protect yourself from even more serious money worries.
Q: I got hurt working odd jobs a few months ago and it’s taking a long time to get better. I was working for cash and kind of for myself, so I don’t have any income replacement through insurance. I do have a regular part-time job, but I don’t have extended benefits and can’t do that work right now either. I’ve run out of savings and have no family members who can help me. I’ve applied for medical EI, but even if I get it, it won’t be much because that’s from my part-time job. My credit cards thankfully haven’t been cut off yet and I should be able to do a cash advance for one or two more months of rent. Other bills I just can’t pay right now. What can I do? ~Landon
A: After the last few years and the current high cost of living, you are in a very tough position, and I’m sorry that you are facing this difficult situation alone. Losing your income is bad enough but trying to heal from your injuries at the same time makes it that much worse.
Determine your priorities
When you’re in a really tough spot financially, it’s important to focus on what will help you meet your basic needs first. This will keep you as healthy and safe as possible so that you have the energy to get through your rehabilitation and back on track.
When considering your priorities, it has nothing to do with which debt collector sent you the most recent letter. While collection agents might not readily admit it, they do know that when someone is injured and has no income, paying their debts is not a priority. However, the collectors can only work with the information they have. Many consumers shy away from answering the calls and letters of debt collectors. A better strategy is communicating with collection agencies effectively so that your stressful situation isn’t inadvertently made worse.
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Priorities when you’re struggling with no income include:
Your rent or mortgage – keep the roof over your head and your heat and lights on. Contact your lender to see if your mortgage payments can be lowered temporarily or if you qualify for any other mortgage relief. Look at your utility bills to see which can be scaled back or put on hold for now.
Groceries and medical needs – you need to maintain your health and heal from your injuries. Look for ways to save at the grocery store and with how you manage your cooking. Ask friends or neighbours for help with meal preparation if you need it. Visit the food bank, local place of worship, or other community service in your area if you don’t have enough income to support your dietary and medical needs.
Cellphone – you will need a reliable method of communication. However, most cellphone bills include extras that can be scaled back when money is tight. Contact your cellphone provider to see what they can do for you during this period of hardship.
Transportation – you will need to get to essential appointments, especially if you’re going through physical rehabilitation or are looking for work. Ride-hailing, taxis, asking a friend for a ride, and even the bus are good options when driving yourself either isn’t possible or is too expensive.
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What to do if meeting basic needs is a challenge
If meeting your basic needs is a challenge right now, whether you’re convalescing or out of work for any other reason, it’s essential that you communicate your situation to any creditors so that they can extend any hardship programs they have to you. If they don’t know your situation, there’s a chance they will commence with collection activity should you fall behind.
Any money that you do have, take steps to keep it safe. Open a bank account at a bank or credit union where you don’t owe any money. Deposit the money you have into this new account and use this account for direct deposits as well. While changing banks can be a little bit of work, it will protect you from offsets.
Offsets happen when you owe money to a financial institution (loans or credit cards) and fall behind on payments to that same institution. They can use any money that you have in your accounts to pay down these debts without notifying you first. If you suddenly receive a deposit, like an income tax refund or birthday gift, that money is in jeopardy as well.
If you have any assets you could sell, now might be the time to do that. Set any money you earn aside in a separate savings account so that you’ve got a cushion available when you need it. If an item you sell has a loan attached to it, try to sell the item for at least as much as what you owe against it. That way the loan can be paid off and you have one less payment to worry about.
If there’s any way you can generate a little income, without jeopardizing your recovery, see what you can do. Try collecting recyclables from friends and neighbours to return for refund or charge someone a little to park in your yard if they’re short parking at their place. Be as creative as you can while staying within what’s allowed in your municipality. There are more work-from-home options available than ever before. Investigate if any of them are something you could do too.
The bottom line on what to do when you’ve got no income
When money is really tight and credit is all that’s getting you by, stick with spending only on essentials so that you don’t end up deeper in debt than absolutely necessary. And try not to worry about your credit rating. It will go down, but once you’re back up on your feet you can take steps to help it recover too. Then, as hard as it might be, tell your friends and family what you’re going through. No one likes to see their loved ones struggle, and things don’t tend to feel so dark when we get by with a little help from our friends. Even if they can’t support you with cash, dropping by with a meal or offering you a ride will go a long way toward supporting you during this difficult time.
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Scott Hannah is president of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Scott by email, check nomoredebts.org or call 1-888-527-8999.