COVID-19 'Do' and 'Don't'

The effects of the COVID-19 pandemic are unlike anything that any of us have ever known.  My dad is 88 years old (and hopefully remaining fully self quarantined) and I talked to him about this today.  He talked about how World War II led to all kinds of different life conditions - rationing, curfews, etc. - but was absolutely clear that he had NEVER experienced anything like this.

While the horror of the virus, it's mortality rate, evil silent spread, and our inability to yet contain it is one side, the economic effects of this situation are going to be real and urgent for just about anyone who reads this page.  We have compiled a list of Do and Don't items to hopefully provide some guidance in these uncertain times.  Here we go:

DO:  Prioritize the immediate needs of your family over any other issues. What can that mean? An example would be that if the choice is whether to pay a mortgage payment or buy food - BUY FOOD. We can fight with the mortgage companies later.  There is no doubt that paying for the needs of your family is more important than paying a credit card bill or other debt.

DON'T:  Tap into 401(k) accounts, pensions, retirment savings, IRAs or other protected investment vehicle if the reason you are tapping into those funds is to pay creditors.  Retirement funds are often the largest asset that people have.  Depleting that asset can lead to horrible long term financial effects. Retirement accounts are almost always protected in the context of a bankruptcy - if you have to take that kind of action - so, HOLD ONTO YOUR ASSETS as long and as much as you can.

DO:  Let SECURED creditors know if you are going to miss a payment or two.  Secured creditors are creditors that have liens on assets.  Typically this would be in the form of mortgage loans or car loans.  While there may be some government relief coming on these points many secured creditors will allow you to skip a payment.  That simple bit of mercy from a creditor can provide significant relief.  And, if the secured creditor is unwilling to assist, call me.  Seriously, I want to make a list of creditors who are hateful in this time of incredible turmoil...oh, and I will give them an earful for you!

DON'T:  Pledge personal assets as collateral for short term or personal loans.  In times like this it can become very tempting to head to finance companies that provide quick, no-questions asked, high interest rate loans.  DO NOT GO THERE.  If your situation is dire, lacking ability to put food on the table or provide basic necessities, ask for help.  It's humbling to ask for help but I know that the spirit of this community is strong.  Look to government programs, charities, friends, community groups, or whatever other resources there are instead of deepening the financial burden by risking assets and incurring horrible debts.

DO:  Take some time to fully review the status of your assets.  Now would be a good time to take a look at everything you have and create a personal inventory.  Why is this helpful?  Because for money related assets (bank accounts, cash on hand, investments, retirement accounts) you need to know where you stand and what reserves you have.  And because for personal items taking an inventory can outline needs versus wants and, perhaps just as valuable, can provide comfort by finding things to do and memories of times past.  One other thing that can come from this is you might find items that others need but that are surplus to you...if ever there was a time to be charitable it is now.

DON'T:  Panic.  Look, these are going to be tough financial times.  Some industries are going to be entirely closed for a full month (i.e., Las Vegas casino resorts - as of yesterday closing for a month) and others will be affected for a long while that is yet to be determined.  Being without a paycheck is stressful.  Being without a paycheck for an undetermined period of time can be mind blowingly stressful.  We are all in this together.  We will all find solutions together.  Take the time to make good financial decisions.  Don't over buy.  Don't under buy either.

DO:  Tell any debt collector that contacts you that they are out of luck.  While I sincerely hope that debt collectors are taking a lighter approach, they have a job to do.  Maybe they are getting a paycheck for making calls.  While none of us like to be pressured about debts that are past due, now is a particularly tough time.  Paying a bill in collection cannot be a priority over the basic needs of your family.

If you have any thoughts as to other things that I should add to this list then please let me know.  Feel free to call me at (859) 360-1316 or e-mail me at stu@stubrownlaw.com if you have any questions.