stressed-about-moneyIn 2011, the Institute for Financial Literacy researched the most common reasons for bankruptcy filing. They found that while 70% cited overextension of credit as a leading factor, 65% citied reduction in income, 43% referenced job loss, and injury and illness were contributing factor in 30.9% of these cases. Respondents could list more than one reason, which is why these percentages add up to more than 100%. The percentage of people citing injury and illness has been constant the past five years, while job loss and a reduction in income are cited more frequently now than they were in 2001.

Disability and worker’s compensation benefits will not afford you a luxurious lifestyle. Hawaii state law says that temporary total disability benefits are 66% of the person’s average weekly wage. Worker’s compensation death benefits to the surviving spouse are 50% of the deceased’s average weekly wage. When there are dependent children, the disability payout equals 2/3 of the deceased’s average weekly wage. However, Hawaii caps these benefits to 100% of the average weekly wage in the state. Hawaii pays worker’s compensation to the widow or widower for life, but the higher rate for families ends when the children turn 18.

Hawaii sets a three day waiting period before disability benefits must be paid. Hawaii does not have a retroactive period for disability benefits. This means that if you are disabled and wait to file, you could be giving up money that doesn’t have to be paid later by the disability insurance provider.

Job loss does not just hit the disabled; their caregivers may also lose their jobs. The federal FMLA law gives someone time off from work, without pay, to take care of a newborn, a newly adopted child, an ill relative or for their own recovery. Hawaii’s own version of the Family Leave Act applies to private employers that have more than one hundred employees. However, employees only qualify it they are employees, not contractors, and have worked there at least six months.

The individual has up to three months to return to work, and they must be offered either the same job or another one with similar pay and benefits. The Family Medical Leave Act was amended in 2008 to permit someone to take time off for an injured service member or take up to 12 weeks off to handle matters when a military family member is called into active duty. If you’ve been on FMLA, your savings will take a large hit, whether you were the caregiver or the one injured. If you’ve been on FMLA, it is hard to watch the bills pile up, both for your living expenses and medical bills. If you have returned to work but cannot pay the mounting debt, contact a bankruptcy attorney. You could enter a debt repayment plan that makes the monthly payments manageable on your current income.

When you are considering filing for bankruptcy, consider that income such as Workers’ Compensation, Social Security Disability and payments to disabled police officers cannot be garnished. If you are considering bankruptcy due to an extended illness, disability or medical bills, call us today at (808) 589-1010. You may be able to discharge your medical debts and unsecured credit card debt in bankruptcy without having to give up your limited disability income.