Falling into any one of these categories can be financially and emotionally devastating.
In the case of redundancy, says Kirsty Robertson of the NZ Association of Psychotherapists, worst affected are people who are told to clear their desks and leave.
Going home to a response along the lines of "you have ruined the family" adds insult to injury, says Robertson. "This can make you feel more isolated [and] the relationship can be quite badly shaken."
Conversely, says Robertson, it is helpful if the person comes home to someone calm and supportive.
"It can be some time before they start to motivate themselves to take the practical steps they need to." How long it takes can depend on their resilience and the other things happening in their lives. Nonetheless, most people pick themselves up eventually.
The three keys to starting again are:
* Don't let your pride suffer.
* Have a written plan.
* Use available resources.
Don't let your pride suffer: Bankruptcy and redundancy can leave the victim feeling a failure, leading to a sense of shame, says Robertson. Often we are unaware of the power of shame until we experience a big and public failure.
When people feel shame and failure they tend to withdraw from contact with others. The irony is that contact with others is the quickest way to overcome shame and restore a sense of self-worth.
Another problem is that our society has a huge focus on what people do, says Robertson. "Their job is very much part of who they are. When you don't have [a job] it makes it very difficult for people to hold on to that sense of who they are."
To get over this, people need to see their importance as more than just their job. "They can think, 'I am not just what I do. I am somebody who has a family, or is a sports person, or who does volunteer work', etcetera. Finding ways to be positive is very good for picking up the pieces," says Robertson.
Financial commentator Olly Newland found himself almost destitute in the 1990s after his $500 million public company Landmark was chewed up and spat out by the 1987 stock market crash. It's history that Newland bounced back and became personally wealthy again.
Newland says there were a number of weeks after Landmark turned to custard that he felt down in the dumps. Instead of being able to move forward he had to deal with the wreckage. He realised, however, that he was not destitute and he could bounce back. "Once I faced my demons, I never looked back," Newland says.
Robertson says it is important to have a way of framing what has happened to you that can put this uncomfortable thing in a context that leaves you feeling okay.
"You are not inadequate. You have just been hit by life."
She also recommends taking small practical steps to look for work or to manage the finances.
"Make sure that they are small achievable steps. It is important that you have successes and you don't set yourself up for failure.
"Don't say, 'I will get a job tomorrow'. Instead say, 'I will have looked on the internet. I will have bought the newspaper. I will have rung two [potential employers]'." That leaves room to reward yourself for success.
The written plan: People who have suffered financial catastrophe aren't going to recover overnight. It took Newland years.
As soon as he got his wits about him he put together a plan to build his wealth again with a goal to move back into commercial property investment.
The first step was to start renovating rundown houses and flicking them on. "It was a slow start and I didn't want to take any chances." Eventually he moved back up to commercial property.
The plan may not be to return to exactly where you were before. Newland, for example, didn't want another publicly listed company. His new plan was to "keep it simple".
"Plans need both goals and some built-in flexibility." He believes in a Chinese saying that while a reed's root is firmly planted in the stream bed, the stem can move with the flow of the water.
Someone else who is in recovery from financial setback is Aucklander Moni Judd. Judd suffered a series of financial disasters over three years, which started with the winding up of her software publishing business, followed by the accidental death of a sibling, and then the theft of a high-end computer she needed in order to work.
The debt racked up quickly. "It was inconceivable to me that I would end up in that situation," Judd says. She felt ashamed at first to admit that she was having financial difficulties. The pain of doing nothing, however, was greater and she sought help.
"As a faithful member of a church I contacted CAP [Christians Against Poverty] and attended a CAP Money course in South Auckland." She had to establish a budget, set up a number of accounts to separate payments for different expenses and had a cash amount each week to spend.
"A year later, I am breathing easy. While I still have some debts to pay, I am keeping all my payments up. It is incredible the turnaround I've had."
Not only has she settled debts, but she has established a healthy savings programme, and says she is healthier, calmer and enjoying life to the full.
Like many people who have suffered crises and sought help, Judd says she is stronger as a result.
Use available resources: The feelings of shame and failure from a financial disaster often drive people away from those who can help them. Yet there are many free resources such as CAP Money courses and budget counsellors, which can be helpful in times of financial need.
Judd is a great believer in seeking help. As well following the CAP programme she attends Debtors Anonymous meetings (12steps.co.nz) and has attended a number of free Inland Revenue seminars.
When financial problems seem insurmountable, even calling the creditors, the IRD or the Insolvency and Trustee Service can help. It's better to understand your options than stick your head in the sand. A number of other government agencies, such as Careers New Zealand, offer help.
Banks may help customers organise their accounts or put together a budget. There are more than 100 face-to-face budgeting services provided under the umbrella of the New Zealand Federation of Family Budgeting Services. Anyone who can't face going to one of these centres in person or is in a sudden crisis can get budgeting advice by calling 0800 BUDGETLINE (0508 283 438).
Sometimes, says Robertson, psychological help is what's needed. "Processing the problem can be done with a professional who is removed from the effects of the failure. Psychotherapy is an excellent investment at a time when it may feel like it's a financial indulgence. Sometimes it can shorten the crisis."
* Free financial advice will be available as part of Money Week, which runs from September 2 to September 8. Visit moneyweek.org.nz
