Laid off? First chore is to accept reality AFTER THE AX FALLS

January 30, 1991|By Georgia C. Marudas | Georgia C. Marudas,Evening Sun Staff

From entry level to executives, the ax has been falling as the recession takes hold. While the impact of a pink slip can vary according to a family's circumstances, a job loss is a crisis. But there are steps you can take to help see you and your family through until you get another job.

First of all, you need to accept reality. As simple as that sounds, it's surprising how tough it is, say experts.

"They need to face up to reality. They need to jump on it right away. That's their best shot," said John Gengler, education director at the non-profit Consumer Credit Counseling Service of Maryland. "People tend to procrastinate too long. It's a denial of reality."

Men, in particular, Gengler said, have trouble facing the loss of a job.

"There's nothing more devastating to a man than losing his job. He's knows it's his job to support his family. It attacks his ego," Gengler said.

Here's some advice offered by Gengler and others:

* File for unemployment benefits immediately.

People do not understand the unemployment compensation system, says Edward A. Mohler, president of the Maryland State and D.C. AFL-CIO.

You can only collect benefits -- up to a maximum of $215 a week for 26 weeks -- beginning from the time you file, not from the time you're laid off. "You'll find people waiting two, three, four weeks to file, thinking something's going to turn up and then they go in desperation. But then they find they can't get it in arrears," he says.

Even worse, he says, are those who don't file at all.

"A tremendous number of people think of unemployment as welfare," he said. "It's a service. This is not charity. This is not welfare."

* Analyze -- at once and on paper -- your financial situation.

"In the beginning I try to have them review their severance benefits, health insurance, disability insurance, life insurance, unemployment benefits and liquid assets," says John G. Craten, a Legg Mason vice president and head of the firm's financial planning unit.

The key to financial survival, he says, is to restrict expenses and use liquid assets -- severance, cash savings, etc. -- to pay essentials. This is not the time to take a trip because you have time off and need to relax.

* Hold a family conference, including the children, and explain your predicament. Try to be upbeat but make it clear that it's not business as usual. Go over your expenses and see what you can cut.

"I sit down and go over past spending habits. Obviously it would be a drastic spending change," says Craten. "It's time to read them the riot act."

* See that important payments are made no matter what.

A mortgage is usually at the top of the list, said Craten, because for most middle-income families their home is their biggest asset.

If there's going to be a problem paying the mortgage -- or if one develops along the way -- talk to the mortgage holder. Often, says N. Mark Freedman, a partner in the Towson accounting firm of Katz, Abosch, Windesheim, Gershman & Freedman and president of the Baltimore Association of Financial Planners, a mortgage holder will agree to interest-only payments or some other arrangement. Lenders, he points out, are not anxious to DTC take back a property, particularly in this real estate climate. "Keep them informed all the way," Freedman said.

You also need to keep your health insurance coverage. If your spouse works, check to see if you can get coverage there. Otherwise, federal law requires that your former employer allow you to remain in the group plan for as long as 18 months -- but at your own expense. If that's too expensive, check out HMOs.

Unfortunately, said Susan Yochelson, director of AFL-CIO Community Services, almost none of the jobless people her agency deals with keep their insurance because they can't afford it.

"Most people don't pick up health insurance," she said. "They join the ranks of the uninsured and hope nothing happens."

Contact other creditors such as retailers or credit card companies and be honest about your situation; propose a repayment plan of your own, but don't suggest a plan that you cannot keep, advised Gengler. Too often, he said, people don't talk to companies because they think it's useless.

If you can't work out an arrangement with creditors, Gengler advises, seek help, which is free, from his organization before you use up all your savings and severance. The CCCS can work out repayment plans with creditors and help you draw up a budget. You can arrange an appointment in the Baltimore metro area by calling CCCS of Maryland at 747-6803. Elsewhere, you can find the nearest office by calling 1 (800) 388-2227.

"If they have severance or savings we could possibly stretch two to three months worth to eight or nine months. If they level with us, we'll do what we can to help," he said.

* If you're a union member, notify officials that you have been laid off.

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