Dealing with Debt After a Natural Disaster

a paper that has disaster plan written on it laying on top of a table with a coffee cup next to it.

September was National Preparedness Month. The month is designed to encourage individuals and families to plan ahead for emergencies or natural disasters. Much of the pre- planning will center on creating an emergency kit with supplies you might need, and just as important, making a plan for what to do if disaster strikes in or away from your home.

A big part of your preparedness planning, which is often times overlooked, involves your finances. The first savings goal we coach people on is establishing an emergency savings fund. This fund is usually to help support you through a temporary personal crisis situation, such as unexpected car repairs, however, it’s just as crucial in the event of a natural disaster.

Take time now and follow these tips to get organized and prepared:

Emergency Kit

Create an emergency kit, there are some specific items to have set aside that could become very expensive in the wake of a crisis:

  1. Water. Stockpile bottled water sufficient to your needs. Mark your bottles with the date of purchase and rotate such to maintain freshness. Some brands specify an expiration date, the industry has said bottled water has a shelf life of two years. Also stock filters and/or purifiers in case your stored water runs out. If your household drinking water becomes contaminated by a disaster, your family’s health will be at risk.
  2. First aid kit. This is an item that will sell out quickly if disaster strikes, so make sure you’re stocked up now, while the price is reasonable and no one’s fighting for that last first aid kit. If you require special medications (blood pressure, diabetic medication, etc.) make sure to have extra in your kit. If you wear prescription glasses, have an extra pair in your kit.
  3. Cash. Have assorted small and larger bills in cash on hand, as ATMs and other banking methods may not be operational.
  4. Preserved food. Canned goods, with a portable, manual can opener and/or dehydrated food (you’ll need water to add to this) that will keep for an extended period is essential.
  5. Lighting. Flashlights, candles with matches, and glow sticks.
  6. Batteries. If you can find a wind-up flashlight and emergency radio, that’s ideal. But chances are you’ll still need batteries on hand for emergencies. A cell-phone charger that takes batteries could be a lifesaver if your power goes out. A solar powered charger is also recommended to have on hand.
  7. Bedding. Your house could be severely damaged by a storm or fire, and you’ll be forced to sleep somewhere else. Have sleeping bags you can take with you if you end up having to sleep away from home.
  8. Hygiene supplies. Have things like disinfectant wipes, toothpaste, deodorant, toilet paper, and anything else you’ll need if you’re forced to pack up and evacuate in a hurry.

Remember that these items need to be assembled in containers or backpacks that are secured and placed in a location that is easily assessable.

Also bear in mind that gas may become impossible to get after a disaster. That’s why you need to do the shopping now. Even if you’re sure all of the items will be available at nearby stores that will do you no good if you can’t buy the fuel needed to get there. Make a habit of maintaining at least a ½ tank of gas or ½ power charge on all vehicles.

Know your region

The kind of natural disaster you might face will be different depending on where you live. If you are in a hurricane zone, you will need different supplies than someone in a blizzard-prone area. Have the right emergency supplies for the disaster you are more likely to face.

  1. Drought. Your water supply may be interrupted in a drought-prone area, so having water stored along with purification supplies will be especially important.
  2. Earthquake. Be ready for extended power failures, with a wind-up radio and/or plenty of batteries. A quick emergency kit with a flashlight and proper footwear should be near everyone’s bed so they can respond quickly. Also take time to anchor all of your household appliances and items, both for safety and financial reasons. Even a minor earthquake can dislodge your water heater or shelving, leading to large repair costs.
  3. Fire. Fire can strike anywhere, so everyone needs to be prepared with adequate smoke detectors and a disaster plan for evacuating if there is a fire.
  4. Flood. Flood-prone areas will typically contaminate your water supply, so have bottled water and purification supplies ready. To be financially prepared, get flood insurance (this is not included by default on typical home insurance policies).
  5. Heat waves. High temperatures can lead to power outages, so having dry goods and canned food is important. Water supply will also be important if temperatures spike.
  6. Hurricane. Have supplies to board up your windows if you live in a hurricane zone, and keep all of the other standard equipment—water and power-outage preparation—at the ready.
  7. Landslide. If you live in an area where landslides can happen, you’ll want to have an evacuation plan and all of the emergency supplies we’ve discussed above. Make sure your insurance will cover you in the event of a landslide.
  8. Terror attack. Maintaining communications will be a priority in case of this kind of emergency. Have a plan for where to meet and how to check on loved ones. Taking a first aid/CPR course is a good way to be extra prepared for any kind of crisis.
  9. Tornado. If you live in tornado country, chances are you have a shelter already. Make sure you and everyone in the house knows where to go if a storm strikes. You probably won’t have time to board up all of the windows, but having functioning shutters installed is a great idea. Being ready to lose power & water, and knowing all of the disaster prep tips above will serve you well.
  10. Wildfires. If you live in an area in danger or wildfires, having a plan is crucial. Never let the gas tank run dry, as you might have to make an emergency exit and stopping for gas may not be an option.
  11. Blizzard. Winterizing your vehicles is important if you live in snowy areas. It will save you money and could save your life. Plan to be stranded by the snow, so keep your car stocked with a blanket or warm clothing, emergency kit, kitty litter for getting past slippery ice, and chains or sandbags for getting your car un-stuck in the snow. At home, keep firewood and preserved food in case the weather keeps you cooped up for an extended period.

Financial Preparedness

Regardless of the kind of disasters you might face, you should take some steps ahead of time to be prepared:

  1. Document Retention. Store your important financial documents somewhere secure and dry, and if they are uploaded to the cloud, make sure they are passcode protected and encrypted.
  2. Credit report. Have a plan in place to always get a copy of your annual credit report, and retain a copy. This way you’ll have a copy of your credit report before the disaster, so if your credit rating is impacted, you can show lenders and/or landlords what it looked like before the natural disaster happened. You’ll also see all of your accounts to make sure there aren’t any debts or obligations you’re forgetting.
  3. Establish an emergency savings fund. This is a critical goal for anyone, but is especially important ahead of a natural disaster. Your goal should be a minimum of 90 days’ income in savings. Most people will have difficulty achieving this goal; focus on developing the habit of saving and setting aside whatever you can. At the very least, make sure your emergency savings is growing every month.
  4. Have cash on hand. Your emergency fund should be securely deposited in a bank, but do have some cash you can use in an emergency—if everyone’s power is out, ATMs won’t work, and merchants might not be able to take credit cards. If an emergency forces you to spend from your cash reserve, only use that money for absolute necessities.
  5. Inventory your property. Create a record of your valuables. Photograph where everything is in your house, so if your house is completely demolished or burned down, you can demonstrate your full losses to your insurance company. You may create a free online home inventory using apps like With no limit to what or how much you can track, this app allows you to easily document your entire home and create reports to file a claim if necessary.
  6. Be properly insured. Speaking of insurance, make sure your policy covers all of the potential disasters you might face. For flood insurance, you will likely have to add on a second policy. After completing your home inventory from the step above, make sure everything is covered by your policy; you might need an extra rider to cover valuable collectibles, artwork, jewelry, etc.

After a disaster strikes

There are some special steps to take when dealing with the financial fallout:

  1. Call your creditors. Every creditor will have a disaster policy in place. Make sure they know you were impacted by the natural disaster. They may waive late fees or let you skip payments for a month. Depending on the situation, they may even have payment assistance for those who were hit especially hard.
  2. Create a budget. Control and plan every dime of your spending until the crisis has passed, and only start resuming your normal budget when you’re fully back on your feet. Also, you’ll want to, when possible, proactively turn off services you don’t have access to after a disaster, like cable and internet.
  3. Keep records. Document conversations you have with your creditors and utility companies. Come up with a narrative that describes how you were impacted by the disaster and refer to it so you don’t forget any crucial details. Later, you can turn this disaster into a 100-word statement that can be added to your credit report. (Learn how to add a statement to your credit report from our Consumer Guide To Good Credit).
  4. Seek assistance. is the place to start. Many large disasters will inspire government funding for those affected, but you have to make sure you are on the list. So don’t wait to reach out and keep your ears open for special recovery funding. Your insurance company might have special programs as well.

Don’t wait to seek professional help if you are caught in a natural disaster. No matter how prepared you are, there will be financial consequences that you will face, and coming up with a plan to address these issues is essential. We can help, with debt counseling or one-on-one expert advice from a certified credit counselor.

Article written by
Melinda Opperman
Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined in 2003 and has over two decades of experience in the industry.

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