When you are a victim of a natural disaster such as Hurricane Katrina, your recovery takes the form of a four-phase project:
- Register as a person affected by the disaster;
- Schedule inspections of your home and car;
- Apply for help from the Small Business Administration;
- Apply some more — for grants, tax help and other assistance.
- Sometimes these phases overlap.
Register as a person affected by the disaster
When a federal disaster is declared in your area, a member of your household will be directed to call a toll-free number — (800) 621-3362 — to register your family with the Federal Emergency Management Agency, or FEMA. Just one member of a household should call — preferably, a person who signed the deed or lease. If you are separated from the rest of your family, go ahead and call. Let FEMA sort it out if multiple people in the family have registered.
People who are hearing-impaired may call (800) 462-7585.
The number connects you to the Federal Emergency Management Agency’s national phone center. Among the questions you will be asked:
- What’s your name, the address of your damaged dwelling and a phone number where you can be reached? If you don’t have a phone — say, your house was destroyed and you’re staying at a shelter — you’ll be asked to provide the phone number of a friend or relative who can reach you. If you can’t provide a phone number right away, you can always call later to give your contact number.
- What’s your mailing address? You’ll be asked for directions for inspectors to reach the home. If your home was destroyed and mail can’t be delivered there, you’ll be asked to provide an address where you can get your mail. Otherwise, you’ll be told to pick up your mail at a post office.
- Are you a homeowner or renter?
- How many people live in your household?
- What’s the household income?
- Generally, how much damage did your home and your personal property sustain?
- Was the home insured? Were the contents insured?
You’ll be given a disaster identification number. You’ll use it in your dealings with various government agencies. Don’t lose the number.
Seriously. Don’t lose the disaster identification number.
In most disasters, you should receive a packet from FEMA in a week or so. With Hurricane Katrina, it might take longer. The packet from FEMA will contain:
- A printout summarizing the information you supplied;
- Information about help you might qualify for, such as low-interest loans, grants and emergency housing;
- Contact information for various agencies;
- A letter specifying which programs you have been referred to.
Besides registering with FEMA, make your situation known to insurance companies, lenders and unemployment offices. Contact the insurance companies that insure your home (whether it’s a homeowner’s or renter’s policy) and your car. If a loved one has died, contact the life insurance company.
Call your lenders — for mortgage, auto, student loans, credit cards and other debts — to let them know what’s going on. If the disaster puts you out of work, your creditors need to know. Federal regulators have urged lenders to give borrowers a break. But you have to contact your lenders. If you don’t, they’ll assume that you are able to pay. You might wonder why they don’t just forgive late payments from certain ZIP codes. Keep wondering.
Schedule inspections of your home and car
The next step is to undergo inspections — in some cases, lots of them.
You’ll probably deal with insurance adjusters for your home and car. If your home was damaged by flood and you had flood insurance, you might deal with a separate insurance adjuster focusing on that.
The insurance industry is handling this huge-scale disaster in reverse order. Adjusters usually are sent to the hardest-hit area first, then move to the periphery. Katrina’s damage was so extensive, and it’s so difficult to drive in and communicate from the worst-hit communities, that adjusters are starting out by inspecting property on the edges. Later they will go to the worst-affected communities, such as Pass Christian, Miss., and New Orleans.
FEMA will call, or send a letter, to set up an appointment. The FEMA inspector is required to try at least three times to contact you, preferably on different days and at different times of the day. You or a representative (such as an attorney or spouse) must be present when the FEMA inspector looks over your property.
The FEMA inspector will survey the damage and hand you an application for aid, if one wasn’t included in the packet you received in the mail. The application will say it’s for a Small Business Administration loan. Even if you don’t own a business, and you wouldn’t be able to repay a loan, fill out the application. It is used to determine whether you qualify for grants that you don’t have to repay.
If you apply for aid from the Small Business Administration, an inspector called a “loss verifier” will assess your property.
If power, gas, water or sewer lines were cut in the disaster, you’ll have to deal with utility inspectors before service is restored.
Apply for help from the Small Business Administration
When you apply for a loan from the Small Business Administration (SBA), you are filing two applications in one: for an SBA loan, if you can afford to repay, and for FEMA grants, if you can’t repay a loan. This section will discuss loans and the next section addresses grants.
The SBA will lend you money to pay for certain uninsured losses if you can afford to repay the loan. These are loans for individuals and families, not for businesses. You don’t have to spend your savings or apply for a loan at a bank as a condition of borrowing from the SBA.
The SBA offers personal property loans and real property loans. Interest rates vary, depending on how much it costs the federal government to borrow money and whether you are able to get credit elsewhere.
A renter or a homeowner may apply for a personal property loan. With it, the SBA will lend you up to $40,000 to repair or replace clothing, furniture, appliances, automobiles, perishable food, even dentures and eyeglasses.
Homeowners may apply for a real property loan. With it, the SBA will lend you up to $200,000 to repair or restore your primary home. The amount you get from the SBA depends on your insurance settlement; if the insurance company drags its feet, you can get an SBA loan for the full amount and then assign any insurance proceeds to the SBA.
In some cases, the SBA will refinance your mortgage at a lower rate.
You can’t borrow from the SBA to restore your vacation cottage if it’s not your primary home. If you own rental property, you can apply for an SBA business loan.
Apply for grants, tax help and other assistance
You have to repay SBA loans. You don’t have to repay grants. And FEMA coordinates a gamut of grants.
First, FEMA gives out emergency grants for disaster-related medical, dental and funeral-related expenses not covered by insurance. If a loved one dies in a disaster and you don’t have the money to pay funeral expenses, this grant is what you need. You might be referred to one of the grant programs when you make that initial call to register with FEMA.
FEMA will give property owners up to $15,000 for emergency repairs to make a structure fit for habitation. The agency, together with the state government, gives out what are called Individual and Family Grants. These are given to people who are turned down for SBA loans because of inability to repay. They can be used for the same purposes as SBA loans. FEMA also offers grants to state and local governments for “hazard mitigation” — elevating houses above a flood plain, for example, or strengthening structures in earthquake zones.
Believe it or not, the Internal Revenue Service will ride to your rescue, too. You can file an amended return called a 1040X and deduct your disaster-related losses against last year’s income. This can be a lifesaver, because it means you can get a hefty tax-refund check in a few weeks instead of having to wait until next year to file a return. If you can afford to wait, you can deduct your disaster losses against your current year’s income.