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Detroit-Area Financial Lawyer: How to Survive This Crisis Without Cash Reserves

March 22, 2020, 10:23 PM

The writer, a Southfield attorney at the Thav Gross law firm, specializes in financial law.

By Kenneth Gross

I'll cut to the chase. We don’t know how long this will last – but each day means less money (or no money) to pay for essential items and greater fear.

Here are my suggestions for the many, many people who have no cash reserves.

If you have available credit on credit cards, use it for food and essentials and take cash advances so you have a cushion to fall back on.

Take the available credit before pulling funds from your retirement accounts (assuming you’re not retired and using these funds in retirement for this purpose).

If you have a home equity line – I think you should draw the funds available and put them in savings. I don’t want you to use this money unless you exhaust the available cash and credit on credit cards. The reason to draw the funds is to protect yourself in case the banks shift gears and start slashing available funds on equity lines because real estate values fall (which could occur with the unknowns we are facing).

When this is over, the goal – which may be attained and may not – is to preserve as much of your retirement and home equity as you can. Credit card debt can be resolved through debt resolution or bankruptcy alternatives in a way that you pay back none of it – or only a small percentage of the amount borrowed.

Some people will say you should repay what you borrow and pay the interest. If we lived in a normal world, where money was loaned at 5%-9% interest, rather than 19%-32%, and we were not facing a pandemic, I’d agree.

But that is not the case. This is a fight for survival. You and your family come first.

Good luck, stay home, abide by social distancing, keep the faith and look out for yourself



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