The global COVID-19 pandemic creates a lot of worries, fears, and concerns. Getting the virus isn’t even the largest concern on many people’s minds.

The truth is the larger concerns may be financial ones. A recession seems inevitable. Layoffs are already happening across the country, and the job market is already tightening. 

What do you do if you’re someone who is vulnerable to a severe financial disruption during this trying time?

Downsize if Possible

Now is a good time to take a hard look at your current financial position. If there are expenses you can cut then it’s time to do so. You may need to move into a smaller place. It won’t necessarily be easy, but it could help a great deal. 

This is absolutely impossible for some people. There are quite a few people in our country who have downsized as much as it is physically possible to do so while still maintaining basic necessities. This advice is not aimed at you.

Stop Using Credit

The truth of the matter is that bankruptcy may become an important option for you during the next recession. You’ll want to do everything you can to protect that option.

This means avoiding new credit cards entirely. Remember, if you’re paying for your basic necessities with credit cards that’s a sign that you should already be considering bankruptcy. You might not even be able to get through the downsizing process until you do.

Taking out new credit right before a bankruptcy can vastly complicate your case and make it harder for your attorney to help you.

Avoid Major Purchases and Transfers

Major purchases and major transfers both get scrutinized during the bankruptcy process. Certain purchases and transfers can trigger a presumption of fraud.

That’s not to say you can’t sell your second car if you’re trying to downsize, but you do want to consult with a bankruptcy attorney before you start making major financial decisions. 

Make Payment Arrangements

In some areas of the country, certain companies and utilities are offering pandemic relief by offering generous payment arrangements. Take advantage of these arrangements if you’re falling behind. They can buy you some time and breathing room while keeping your account in good standing.

Do this only for necessities like rent, transportation, and utilities. Negotiate with your credit card company if you’re current and can, but don’t make it your first priority.

Avoid Paying Collection Agents

Paying collection agents is a lot like throwing money into a black hole. It won’t help your credit and it won’t help you.

Expect collection agents to get a lot more aggressive right now. They’ll tell you to dip into your retirement account (don’t). They’ll threaten to sue. Don’t worry about it unless they do.

Know that if a lawsuit does come around then you can file bankruptcy to stop the case in its tracks. 

Know and Use Your FDCPA Rights

During this time of stress you don’t need collection agencies calling, texting, and emailing constantly. 

Don’t forget you can send these collection agents a letter advising them that they may only contact you via the US Postal Service. Send it certified, and mention specifically that you’re invoking your Fair Debt Collection Practices Act rights.

Document any violations as you can take these collection agencies to court for them, and may even recover damages.

Keep a Good Bankruptcy Attorney on Call

Bankruptcy may be the decision that sees you through the recession. Be ready to consult with an attorney about your specific situation to see if it’s the right solution for you.

In the meantime, be safe, and be well.

See also:

What is an Emergency Bankruptcy?

What is it Like to Declare Bankruptcy?

This Letter Template Will Get Debt Collectors Off Your Back