Being involved in a road accident affects a person’s quality of life dramatically. According to therapists, every year, road accidents lead to debilitating PTSD and anxiety disorders.
Additionally, many individuals experience flashbacks when they take the road again, as a driver or a pedestrian, which can affect their independence.
Physical injuries can be equally distressful, compromising people’s lifestyles, careers, and social skills.
Yet, cost remains the biggest and most life-changing factor after an accident. Indeed, a road accident can force a person into temporary or permanent unemployment, a situation that makes it hard to cover everyday costs and medical recovery. It can be a snowball effect that destroys someone’s financial stability. Financial experts recommend a multi-step approach.
Step 1: Prevent further damage
The aftermath of an accident often feels like an infinite accumulation of debts. It is important to know that some of these debts could be addressed with the support of specialist legal advisors and compensation payments from insurance and other parties. However, financial help can be a long process. Therefore, financial experts recommend obtaining a DRO — debt relief order — which acts as a simplified alternative to bankruptcy. The process enables the individual to deal with debts they can’t afford to pay at the time. At the end of the DRO, debts are written off. However, if the financial circumstances change, you can arrange to pay your creditors and get the DRO revoked.
Step 2: Defend your rights
A road accident typically involves a party’s liability. If you are not responsible for the accident, it can be beneficial to reach out to reputable pedestrian accident lawyers or car accident advisors to recover most accident-related costs. A lawyer can help obtain financial compensation to address several costs linked to the accident. Medical costs, if they are relevant, can become the responsibility of the guilty party, including permanent medical equipment. Additionally, the lawyer can also argue in favour of income replacement or partial replacement if the accident affects your professional earnings. Furthermore, replacement costs for items that have been damaged in the accident can also be applied.
Step 3: Review the financial situation
With the help of a legal advisor, you can significantly improve your situation. It’s the perfect time to evaluate your financial health and understand the extent of the remaining debt. The first step is to calculate your net worth post-accident. The exercise allows you to compare your current assets vs everything that you still owe. Increasing your net worth will help pay your debt down. You will also need to consider your debt-to-income ratio, focusing on how much you can expect to earn after the accident.
Step 4 Create a plan
Last but not least, with a better idea of your current debts, you can set a repayment plan. If the DRO is still relevant, there is no need to contact your creditors. However, if you are in a position to repay some debts, you should inform the creditors. Debt consolidation allows individuals to combine multiple debts into one manageable payment, reducing monthly costs. The process can help improve credit score and streamline your post-accident finances. However, debt consolidation is a management solution that only applies if you can repay your debt. It doesn’t eliminate debts.
Ultimately, managing your finances after an accident can be an overwhelming and challenging process that depends on each individual’s unique circumstances. But finding financial and legal support can improve your chances of recovering from accident debt.