Dealing With Losing Your Job

How Do You Protect Your Assets? What Steps Should You Take?

Collecting Unemployment

If you lose your job, the first step you should take is to register for unemployment at your local Employment Commission office. To qualify for unemployment, most states require that you must have been employed during the past 12 18 months. The amount you will receive varies from state to state and is based on your previous wages. You must also meet the minimum earnings requirements set by the state. In most states, you will be allowed to collect for up to 6 months. During those 6 months you must be available for work, must actively search for a job, and must have proof of the job search.

The Unemployment Commission will help you with your job search. They also help with job development services and claims services. When you register, they will ask questions about your background and skills to try and find you a job referral.

Protecting Your Assets

The best way to protect your assets is to plan ahead for job loss by having an emergency fund. You should try to set aside 3 to 6 months’ worth of living expenses. If you do not have an emergency fund, you must examine your current financial situation. Create a list of all of your assets (e.g. stocks, savings, cars, etc.) along with your liabilities (e.g. mortgage, student loans, credit car debt, etc.). Then decide which assets you can liquidate and which expenses you can reduce. You will definitely have to rework your budget to cut out the luxuries that you can no longer afford.

Helpful Tips

  • Consider rolling your 401(k) from your company plan into an IRA. You may borrow the money for a brief period of time, while it is rolling over. Be careful, though, as you must get the money into an IRA within 60 days or you will pay tax and penalties.
  • Keep track of all the expenses that accrue from looking for your new job. Some examples are postage, fax services, copying, and travel expenses. Many of them are tax deductible, if you are looking for a job similar to your previous one.
  • Try to avoid using your credit cards for household expenses. The interest that will accrue could take many years to pay off.
  • Consider Credit Counseling to find ways to lower monthly payments and interest rates on existing debt.

    • Insurance Options

    COBRA, the Consolidated Omnibus Reconciliation Act, will allow continued healthcare benefits for terminated employees or those who have lost health benefits because of reduced workload. You may have to pay for the insurance, including the amount that your employer was paying. However, COBRA tends to be less expensive than an individual insurance policy. Under COBRA, pre-existing conditions are not excluded. You are required to make your first premium payment within 45 days of selecting COBRA and every 30 days thereafter. The benefits will remain the same as when you were employed. Some employers are exempt from COBRA.

    HIPAA, Health Insurance Portability and Accountability Act, will also help with continued coverage if you had employment coverage for 18 months and you no longer qualify for COBRA. Under HIPAA, it may also be possible to make withdrawals from your IRA penalty free.
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