WHAT NOT TO DO WHEN YOU LOSE A JOB

A recent article in the Orlando Sentinel, "Hyatt takes over Peabody, Lays off 68 staff," reminds us that people are continuing to lose jobs. If you lose your job, are laid off, or have your hours cut at work, there are obvious things you should do such as update your resume, reach out to contacts, and look for a new job. But there are also things you shoud NOT do after you're in this difficult situation.

First and formost, do NOT cash in your 401(k) or other retirement savings. Money in these types of vehicles is protected from your creditors. That means they can't touch it or make you cash it in to pay money you owe to them. Also, this retirement money you have saved up over time is for your retirement and not for your current living expenses. If you spend it now, you can never get back that time you had to save it and let it grow so that it can help with your needs after you retire.

Second, do NOT tap into a Home Equity Line of Credit (HELOC). A HELOC is actually a mortgage lien on your home. If you borrow on the HELOC to pay every day living expenses while you are out of work and you later run out of money, your default on the HELOC second mortgage can cause you to lose your home, even though you stay curent in your mortgage payments on your first mortgage. It's better to borrow with loans that are unsecured so that you don't lose the collateral (in this case, your home) in case you are unable to repay the loan in the long run.

Third, do NOT delay seeking help. Many people are shocked, depressed, angry, even ashamed when they lose a job, even thougth it may be no fault of their own. Reach out for help early and often. Of course, seek comfort from family and friends. Apply for Unemployment Compensation which is now called Reemployment Assistance. Most importantly, contact a professional to help you navigate through these murky waters.

An experienced Bankruptcy Attorney can go over all your financial options and help you plan the best way to handle things in case of long term financial setbacks. Find out what property you can keep and what is at risk. Find out if there are ways to shelter some money legally. Learn about reducing expenses immediately and discerning "needs" versus "wants." Let someone obectively help you figure out how to prioritize your finances when there isn't enough money to go around to satisfy everyone.

Over the last few years I've seen people run out of unemployment benefits, even when the state and federal benefits lasted for nearly two years (99 weeks). No one wants to think they'll be out of work for that long, but it happens sometimes. Also, when people find a new job, it is often at a lower salary or pay rate than what they were used to making.

What you don't want to do is use up all your resources (i.e. spend all your savings and retirement money, sell things you shouldn't have, and max out your credit cards) and then seek professional help. Find out what's what and what you should and should not do before you are out of options.

Finally, do NOT take legal advice from someone who is not a lawyer. Even though your friend or sister-in-law may have filed Bankruptcy in the past or gotten around creditors in some clever way, that doesn't mean they have specialized knowledge to analyze the nuances in your specific situation.

Hopefully, with good legal advice and planning, you can make the best of a bad situation and help to secure your future for yourself and your family.