Coping with financial tragedy
By By Lisa Iannucci • Bankrate.com

If you know your situation will affect your ability to pay bills, contact your creditors immediately and let them know that you are having difficulty making payments. Ask for another acceptable payment schedule or a reduction in the current payment amount.

Here are some general guidelines on deciding what bills to pay.

• Do not toss bills or forget to pay them. However, some bills are more important than others. The mortgage is more important than the record clubs. Utilities are more important than the dentist.
• Pay bills that maintain shelter and provide vital services such as the telephone and electric.
• Pay the bills on things that can be repossessed, such as your car.
• Pay bills that cost the most to postpone.

Cover your back
Alert creditors if you are divorcing. "If anything strange occurs on your accounts or if a payment is missed or late, you can get an alert or a telephone call," says Garrett. "Also cancel joint accounts or have your name or your spouse's removed from credit cards. You want to be on top of things."

Do not procrastinate. Falling behind on payments can damage your credit report for at least seven years. Employers, landlords, and even insurers request credit bureau information, so a poor credit record can affect many aspects of your life.

Immediately cut unnecessary spending such as dining out, entertainment and new clothes. Implement smart savings strategies such as clipping coupons, purchasing generic products, and avoiding impulse buying. Above all, stop incurring new debt and using credit cards.

Locate other resources
Research governmental and private resources in your state for unemployment compensation, low-income energy assistance, Medicaid, and Social Security including disability. Church and community resources may be available.

Keep your medical coverage. COBRA can help continue medical coverage under certain circumstances, including job loss, divorce or death of spouse. "Don't drop the ball on this one," says Garrett. "You can't afford not to have health insurance. COBRA payments can be more expensive, but sign up for it until you get a replacement. You can always drop it later." Remember, any break in health insurance coverage can mean you will lose benefits on "pre-existing conditions."

Look into organizations. When Lisa Brinkley's husband was diagnosed with cancer and placed on disability, the couple lost his steady paycheck. He received a minuscule disability check. "I told everyone what I was going through and uncovered lots of resources, whether we used them or not," says Brinkley. "We had resources for food stamps and the American Cancer Society had financial resources."

Check out government programs including Food Stamps, Temporary Assistance for Needy Families, the federal Women, Infants, and Children program, Social Security Disability Insurance, Home Energy Assistance Program (available through most utility companies or Office for the Aging) or the Low Income Home Energy Assistance Program.

"When someone loses a job, a spouse, or has a pending divorce, there is an overwhelming desire to make changes," says Garrett. "It's like jumping off a cliff without looking. You can't recognize how far down it is. Instead, slow down and take a look."

If you haven't been through a financial trauma, now is the time to take steps to prevent one. "Couples need to communicate before something happens, especially where one spouse is handling most of the financial matters," advises Wild.

A financial setback may be hard to accept, but eventually you can refocus back on the road to financial fitness.

Freelance writer Lisa Iannucci is based in New York.