Surviving a workplace bankruptcy |
| By Lora Shinn • Bankrate.com |
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In a weakening economy, thousands of businesses are
closing up shop and laying off employees.
A company's impending bankruptcy can have devastating consequences for fearful employees, says Lisa Lane Brown, author of "The Courage to Win: A Revolutionary Mental Toughness Formula."
"If you let fear turn into panic, you are vulnerable to making poor decisions about your career and money," says Brown, a career coach who has counseled employees battling bad times due to an employer's failure.
By contrast, workers who take charge of the fear and
use it to motivate positive change "will thrive even in stressful
financial times," Brown says.
Following are some steps you can take to protect yourself financially when your company might be headed for bankruptcy.
| Take these steps to protect yourself financially when your company might be headed for bankruptcy. |
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| Surviving a workplace meltdown |
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1. Tidy up your own financial house
Business bankruptcy filings totaled 33,822 for the 12 months ended
in June 2008. That was a 41.6 percent increase from the 23,889 for
the 12 months ended in June 2007, according to the Administrative
Office of the U.S. Courts.
A short list of failed companies includes Mervyn's,
Circuit City, Linens 'n Things, Sharper Image, Bennigan's and Aloha
Airlines. Even auto giant General Motors is teetering.
If your company appears headed for trouble, it's time to get your finances in order before the company declares bankruptcy.
This means crafting an investment mix appropriate for challenging economic circumstances. Brown suggests creating and reviewing a personal financial statement with an accountant or investment adviser.
"Your decisions in this area are completely unique to you and should reflect your risk level," she says.
However, Brown suggests some rules of thumb, such
as having 10 percent to 20 percent of your money available in cash,
30 percent to 40 percent in longer-term secure investments such
as Treasury bills and bonds and 40 percent to 50 percent in real
estate or equity mutual funds.
John Baker, author of "READY Thinking -- Primed for Change," says it may also be prudent to cut back on expenses.
"Defer major purchases and delay expensive outlays,"
says Baker, who formerly worked as a chief operating officer for
Ameriprise Financial and a vice president at American Express.
At a minimum, it's wise to avoid using credit, he says. Instead, set up a six-month reserve of emergency cash. If your budget has become bloated, find ways to trim it.
"Belt-tightening is never a sexy prospect, but going on a budget can give you a sense of personal control during chaotic times," he says.
2. Tie up loose ends with your company
If your company decides to declare bankruptcy, you could be among the last to know.
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