No Job, No Belongings, No Rapture? How to Rebuild Your Financial LIfe
Folks who turned to the sky Saturday evening looking for Harold Camping's Rapture prediction to come true were prepared to travel light. A number of them had no jobs and no belongings: They were ready to be swept up into Heaven. Trouble is, Camping's prediction was a bust, and his loyal followers who gave up everything were left with more than spiritual anguish -- they were left with no financial footing.
Maureen Demers, a registered investment adviser in Massachusetts, is well aware of the impact such choices can have. Her brother was one of Camping's die-hard followers. In an email interview on Friday, Demers had this to say about her brother's situation:
My brother has given away everything he owns and spent the past 4 months travelling the world including Indonesia, New Zealand, and Australia "spreading the word." I have tried to talk to him about the "what if's" in this situation - such as "What if you wake up Sunday morning and you have nothing left?" To him, it isn't even possible.
As far as rebuilding financially, fortunately he is still relatively young (43) and has the skills to work again when he decides to. I think that the psychological devastation will be a bigger issue than the financial one. People will likely not wake up thinking, "Oops, I should start maxing out my 401k now since I may be around a while longer."
DailyFinance looked to Demers, bankruptcy attorneys, an executive recruiter, and a coalition of consumer groups for some down-to-Earth advice on how to regain one's financial footing after literally throwing, giving or selling it all away in anticipation of being transported to Heaven. And while the advice may be particularly well-timed for those had expected the Rapture arrive this past weekend, it can be useful for anyone who finds themselves in difficult financial straits.
Planning for the After (Retirement) Life
Older people who take a financial hit will have the hardest time making up lost ground before retirement, simply because they have a short window to recover and will miss out on the benefit of compounding interest and gains, Demers says.
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But anyone who wants to start over again should begin by building a foundation.
"It seems to me that if you're just starting out of college, or were in a bad belief system that didn't work out, you have to begin at the first stage and take baby steps," she says. "Find a source of income, start building an emergency fund, paying off debt and funding for retirement aggressively."
Of course, Demers noted, people's ability to aggressively allocate money toward their retirement will depend first on whether or not they have any source of funds to cover basic needs like food or shelter. She noted a 401(k), if still owned, could be raided -- if that money was all that was available to pay for food or rent.
Forgive Us Our Debts ... or at Least Restructure Them
Some may have spent heedlessly, thinking that all their unpaid bills would disappear once they were carried to Heaven. Today, those people may find themselves in debt hell. For them, debt restructuring may be the beginning the answer. Consumers Union, publisher of Consumer Reports, posted a blog earlier this week with advice culled from a coalition of Consumer Action, Consumers Union, Consumer Federation of America and the National Consumer Law Center on restructuring debt.
Here's what the coalition had to say:
If you are having trouble paying your mortgage, contact your mortgage servicer (where you make your payments) and ask for a "loan modification." You can also get help from housing counselors approved by the U.S. Dept. of Housing & Urban Development: 800-569-4287 (TTY 877-304-9709) or hud.gov/offices/hsg/sfh/hcc/hcs.cfm. There is more information about modifications at makinghomeaffordable.gov. For other debts such as credit cards, call the creditor as soon as you know you will not be able to make your payment. If you cannot work something out, contact a non-profit credit counseling service. There may be a small fee, but most non-profit credit counseling services will provide advice even if you cannot afford to pay. They will explain your choices, including bankruptcy, and they may be able to set up a plan with your creditors to help you pay off your debts over a set period of time. To find a counseling service near you, contact the National Foundation for Credit Counseling, www.nfcc.org or 800-388-2227.
If restructuring debt isn't going to do it, bankruptcy attorneys suggest that you consider filing for Chapter 7 personal bankruptcy -- an option providing you haven't done so in the past eight years. If you've already gone down that path too recently, notes John Colwell, a San Diego, Calif., bankruptcy attorney, a restructuring Chapter 13 bankruptcy could be used. Although the actions taken by Camping's followers could be considered self-inflicted financial wounds, bankruptcy courts won't necessarily look unfavorably upon such people, he says.
"If people do this based on the conviction of their beliefs and really did it because they think the world would come to an end, then the courts wouldn't find them to be a bad guy. Just because a person is misinformed doesn't mean they can't file for bankruptcy," Colwell said. "But if the court thinks they did this to really hide their assets with mom or someone else, then they won't look favorably on the bankruptcy."
"You Left Your Last Job Why???"
While the bankruptcy courts may be willing to cut some slack for folks who failed to properly time the Rapture, potential future employers may be less kind, says one executive recruiter.
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"If they tell any prospective employer the real reason they left their last job, they'll be laughed out of the room," said Jon Holman, who runs San Francisco-based recruiting firm The Holman Group, in an email interview.
"So the only possible strategies are: apply for jobs only with people who are as crazy as you are, or lie about why you left your last job," he continued. "If they tell the truth, the best they can hope for is politeness and a swift end to the conversation, followed by eternal silence as it relates to that prospective job opportunity."
