Many of my clients tell me, with fear in their voice, that they have one or more bills set to automatically pull from their bank accounts, but they have no money in the bank to cover the payment and will face overdraft charges if the payment pulls from their account. Typically, these are car payments, as many auto loan lenders offer lower rates if the purchaser agrees to set up automatic payments. Some businesses, like your local gym, may require auto-pay agreements. It seems like a good idea, when one is working.
Add an injury or disability into the mix, though, and it can become your worst nightmare. Even under the best circumstances, an injured worker that is receiving their time loss compensation benefits – often 60 – 65% of pre-injury wages, or a much smaller percentage if they were a high wage earner and have hit the ceiling of compensation rates – will most certainly not be getting paid on the same schedule as their payroll department was using. Juggling bills is hard enough with decreased income levels, but the forfeiture of control over the ebb and flow of funds in your bank account can put you in financial peril after an injury.
If you find yourself in the scenario I have described, try contacting your lender or service provider to inquire about making changes to the agreement you signed – or terminating the agreement, if needed – to at least make the drafts from your account occur on a better schedule but, preferably, to take back control of the payments. You should maintain the ability to make payments to creditors on your own schedule when funds are available. The auto-draft agreements are a contractual agreement, though, and you may need legal assistance to alter them. In my experience, though, lenders are usually able to work with their clients to maintain the integrity of their loans. In the long run, repayment is their goal and facilitating your ability to manage your payments is in their best interest, too.
Photo credit: 401(K) 2013 / Foter / CC BY-SA