Sorting Out Severance Packages and Unemployment Insurance

Your first step should be to assess how much money you may still have coming in — usually from two sources: Severance pay (a lump-sump check from your employer) and unemployment insurance.

Many companies don't offer severance packages, so its' certainly not guaranteed. If the company is laying off employees because it is having financial difficulties, you probably wont' be offered any severance pay, but you may be offered a severance package that might include job-placement assistance, continued use of an office so that you still appear to be employed, and freelance opportunities to finish projects that you've been working on. This assistance is not common, however.

If you are offered severance pay, the amount will most likely be based on how long you've worked for the company: A months' pay for every two years worked, for example. If you're offered this pay — six months' worth of income, say — immediately put it away in a safe, interest-bearing account so that it will last you six months (or, perhaps, even longer).

If you're not offered any severance, or if the severance pay is so paltry that it runs out before you've even had your resume printed, you're not alone. Sadly, few companies offer this assistance — those that do are usually companies that have recently merged (and, therefore, have a lot of cash) and have laid off a small part of their staff.

If you were fired from your job because of misconduct, unemployment insurance and COBRA-defined coverage will probably not be available to you. These benefits are meant to assist employees who lose their jobs through no fault of their own.

You're far more likely to receive unemployment benefits, however. The moment you hear you've been laid off, call your states' unemployment-insurance agency. While you may have to visit the unemployment office, some states allow you to file a claim by phone or online.

The amount of your unemployment insurance and the length of time you'll receive it is based on how long you've been employed, the state you live in, and the general economic condition in your area. (In times of severe economic downturn, unemployment benefits are often extended for many more weeks than in relatively healthy economic periods.) Your state's unemployment office will know how many weeks you're eligible for and whether you have any chance of having those benefits extended.

As soon as you find another job, your unemployment benefits will stop. Some states, however, have a self-employment assistance plan that encourages you to start your own business. You receive the same benefits as you would if you were looking for work, but instead of sending out resumes and going on interviews, you're spending your time getting your business started. Ask your state whether a self-employment assistance program is available to you.

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