Accidents happen to the best of us. Some are relatively painless, others are incredibly painful — not just in the emotional or physical sense but in the financial sense as well.
Take car accidents, for example. Even a minor fender bender can set your finances back months or even years.
How are you supposed to get back on track after an accident wipes out your emergency fund, increases your insurance, and leaves you holding what will likely be a substantial bill?
Get Professional Help
One of the first things you need to do is consult with a personal injury lawyer. There is no one better versed in what kinds of damages and financial offsets you are entitled to get if the accident was not your fault.
A good lawyer can help you fight an insurance company that is dragging its feet on payment, a hospital that is overcharging, and even (when it’s warranted) the other driver(s) involved.
For some reason, we have given personal injury lawsuits a terrible stigma but if you have been significantly financially impaired (or need to prevent significant financial impairment), hiring expert help is the way to go–especially since typically in these cases, the lawyer will only charge you if you win and even then, it is a percentage of the settlement.
Reworking Your Budget
If you aren’t able to get a settlement after an accident and are left facing some big bills, the first thing you need to do is take a look at your budget.
Yes, this is what emergency funds are for but what if your emergency fund doesn’t cover everything?
Go through your budget line by line. Can you cut back anywhere? Can you cut anything out?
There are plenty of ways to reduce your spending without having to completely uproot yourself or your family.
Protect Your Credit
You might be tempted to take out a loan to cover everything and if you have really great credit, this might be a good option since the interest rate you’ll get should be relatively low. If your credit isn’t great, though, don’t worry. Most of the businesses to whom you owe will be more than willing to set up a payment plan.
The important thing is that you are honest with them. Pay as much as you can now and then ask for help with the rest.
Set the plan up so that you can actually afford the monthly payments — this way you won’t have to worry about not being able to afford them later on and then set those payments up to be automatically deducted from your checking account. This way they will always be paid on time, which will look really good on your credit report and could even help you raise your score!
Asking for Help
If you are truly strapped, don’t get caught in the trap of high interest payday loan schemes. These predators prey on the destitute and the desperate. Payday loan interest can be even higher than 300% on the loan you take out! Just say no!
Instead, try the crowdfunding route or a Peer to Peer lending platform. The great thing about these platforms is that, in the case of crowdfunding, you do not have to pay the money back to anyone. For this, you will want to use sites like GoFundMe or YouCaring instead of IndieGoGo or Kickstarter.
For Peer to Peer lending, sites like Prosper, PeerForm, Lending Club, Avant, etc. help pair you up with private lenders who might be willing to front you the cash you need at a low interest rate to making paying back the loan easier.
Another great option is to use one of these sites to set up social lending. This is a new form of crowdfunding/peer to peer funding where the company uses your current social network to cobble together the funds you need. Unlike straightforward crowdfunding, though, in this case, you will pay back the lenders via the company.
Another option to keep your finances from completely falling apart is to take on a second gig to help offset the cost of whatever bills you have to pay after your accident.
There are tons of great gigs out there that allow you to work in your spare time doing a whole bunch of different things.
Admittedly, you might not have a lot of luck getting a driving gig with a recent accident on your record but there are plenty of other options.
The point is this: a car accident doesn’t have to be the end of your financial world. There are a lot of ways to offset the costs and rebuild your savings without having to declare bankruptcy.