(Continued from Going Broke While Waiting on Disability.)
It's important to know how long the application and appeal process might really take before disability benefits are eventually awarded because it is extremely difficult to live for two and a half years with zero income and no means of support, and because knowing in advance how long the disability process might take might also allow a claimant to plan and minimize their financial loss or, in some instances, avoid a financial loss.
By the time a hearing date before a judge has been set, most disability claimants do not have a dime left. The worst case scenario, of course, is for a claimant to lose the home they live in, either through foreclosure or eviction proceedings.
How can this be avoided? Sadly, it may not be avoidable for many who seek disability benefits. However, the person who rents and is aware of the extreme length of the disability process may wish to consider moving to a cheaper rental home or speaking to a friend or relative regarding the possibility of moving in as a roommate. Looking into such a possibility sooner rather than later would be preferable to being evicted.
The person who owns their home may wish to consider refinancing their home to lower their monthly payments while they wait out the disability process. Or, if they have equity available in the home, they may wish to pull some of this out for the purpose of "making ends meet" while for they wait for disability benefits to be approved. Some would argue that money should never be borrowed against a purchased home, and for good reason. Most situations do not require such measures, but filing for disability is a different and unique type of situation. As said before, the process can easily take over two years from start to finish. And, certainly, the worst case scenario would be to lose one's home because a financial plan was not developed and set in motion. (You may want to visit Nolo's Avoiding Foreclosure information.)
Here are a few general tips to consider whether you rent or own your home.
1. Get a second checking account. Here's why. Individuals who lose their primary source of income often have their credit negatively affected. This is a given. However, what many people may not anticipate is a situation in which they owe their bank money, and the bank closes their checking account.
For example, a person who pays their car insurance through an automatic monthly draft might find that they owe money to the bank due to insufficient funds in their account. If the money owed to a bank is not repaid within a certain length of time, not only will be the account be closed, but a report will be sent to something called Chex systems. Chex systems is the equivalent of a credit bureau for checking accounts. Once a report has been sent to Chex systems, it becomes nearly impossible to open a checking account anywhere. And, of course, when one does not have a checking account, life becomes immeasurably more complicated. So, to safeguard against this possibility, it may be best to open a second checking account and keep it open, just in case.
2. Get another credit card. While it's true that, for most individuals, getting another credit card might be the worst thing to do, for the disability claimant it might actually be good advice. Individuals who can qualify for cards with large credit limits can set aside for themselves the option of "getting a loan when they need it later." Even with smaller limits, an extra credit card can provide money to alleviate a desperate situation later.
3. Look into social services aid sooner rather than later. Many individuals feel embarrassed about the prospect of visiting their local department of social services. However, the person filing for disability benefits needs to think in terms of "how will I make it through this?" And though the benefit amount from a program such as food stamps may be low, it will nonetheless help.
How do you qualify for food stamps? The qualification is based simply on assets and income. However, certain assets are generally not counted against you, such as your home or primary vehicle. Of course, if you have no income and only limited assets, you should easily qualify for food stamps.
Many departments of social services will also have a department for adult services (different states may call this section by different names). By contacting an adult services social worker, you may be able to learn about other avenues of assistance in your immediate area. For example, adult services social workers can sometimes give referrals to privately run assistance programs and charitable organizations.
Learn more about financial help that's available while awaiting a disability decision.