By Gerri Elder, TotalBankruptcy.com Contributor
During September 2008, the nationwide unemployment rate was holding steady at 6.1 percent. However, economists predict that more mass layoffs could soon push the unemployment rate to 7 percent.
As companies struggle to cut costs to decreased demand for products, many thousands of Americans are put out of work as their jobs are eliminated. The poor nationwide economy has put many people who previously had job security at risk for unemployment. And we have seen that more unemployment leads to more bankruptcy filings under Chapter 13 or Chapter 7 bankruptcy.
Mass layoffs often come quickly and can catch many people off-guard. However, there may be clues that your employer will soon be making job cuts.
Hiring freezes, expense reductions, travel cutbacks or management resignations may be indicators that a company may soon have a mass layoff. Additionally, experts say to pay attention to the news for clues that your job could be eliminated. If your employer's competitors are having mass layoffs, this could be a warning sign that your job may soon be eliminated.
In these uncertain economic times, it pays to be prepared for the worst. Experts say that there are things you can do to reduce the devastation if you are suddenly laid off.
Some companies offer job training and outplacement services to help employees faced with layoffs find new jobs.
If you prefer not to find a new job and instead start your own business, you may attempt to negotiate a cash payment instead of outplacement services. This may not always be possible, but it is often worth asking. Financial experts suggest that you include an explanation with your request.
The Pittsburgh Post-Gazette also suggests that if you are faced with a layoff, make sure that you get what you are owed.
If possible, you should focus on keeping your health insurance coverage. In most cases, employers will pay for medical coverage at least through the end of the month. If the layoff happens at the end of the month, you might try negotiating to keep your coverage through the next month.
You should also be sure that you receive whatever money you have accumulated in your 401(k) plan and your pension benefit plan. Remember to roll over your 401(k) into a traditional IRA using a trustee-to-trustee rollover. If this money is taking in cash, there can be stiff penalties, so this should be avoided.
Tax laws prohibit a direct 401(k) rollover into a Roth IRA. However, you can transfer your account from a traditional IRA to a Roth IRA after the rollover.
If you have vested stock options with your employer, check the price now and decide if you should exercise them. Usually you will have 90 days to do this, or lose them.
When exiting your job, try to get a written job recommendation. If you are laid off through no fault of your own, a letter of recommendation that explains that you were not fired for poor performance could come in handy.
Despite the best preparations, becoming suddenly unemployed in a poor economy and during a global credit crunch can quickly throw your finances into a state of crisis.
Whether or not filing bankruptcy is your best option, speaking with a local bankruptcy lawyer may help you put things into perspective after your job loss.
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