Michelle Castillo

(WOMENSENEWS)–Hurricane Katrina drove Michelle Castillo and her family out of their secure life in New Orleans–including a pool in the backyard, a steady job and a comfortable house–and straight into the ranks of Americans who stand on the razor-thin edge between economic security and economic peril.

More than a year after Katrina destroyed everything they owned, Castillo is hovering on the precipice of bankruptcy, falling further behind on bills every month as she tries to support her two children and her elderly father.

“We’re surviving not even paycheck to paycheck,” says the 42-year-old single mother, who carries no credit-card debt. “Every month is a battle to make sure all the bills are paid and I’m often late with some payments.”

Castillo now works Monday through Friday for a consumer debt agency in Orlando, Fla., but her job is commission based, bringing in $1,600 to $2,000 a month before taxes, and provides no additional benefits or health insurance for the family. Her father Allen Wallace donates much of his $1,000 monthly pension to help. From the pooled resources Castillo must cover the $1,200 rent, utility bills, a used car payment, gasoline, food and other necessities for the family of four.

“There is no place to cut expenses,” she says. “We have to eat and have utilities, and we have to have a car for my father’s doctor appointments and for me to get to work. We are not spending a single dollar extra.”

Thrift Store Touches

The dining and living rooms in the family’s rented Orlando home are mostly empty and have a neglected look, but Castillo has managed to turn a room just off the kitchen into a cozy den where she and her two children spend most of their time. The room’s worn couch set–the ottoman doubles as a coffee table
–serves as their gathering place for family time, homework sessions and watching the television they bought at a pawn shop.

Castillo split a bedroom set she found at a local thrift store, giving the dresser to her 13-year-old daughter Alexandra, while putting the bedside table in her own room. Castillo and a cousin made a makeshift canopy from thin material and rope to cover her bed.

“We’ve got a $49 table from Wal-Mart, thrift store furniture and some pieces donated by Floridians after the storm,” Castillo says. “Sometimes it’s hard to look around and remember what we had before.”

Back in New Orleans, where the family rented their home, they had hand-carved furniture handed down for generations, name brand appliances, family photos and keepsakes, and all the material possessions of a middle-class family. When the Castillos fled New Orleans, they had three changes of clothes and lost everything else.

The few extras the family has now came in the form of gifts from relatives and friends. Castillo’s ex-husband–who is required to send her a $200 a month in child support–bought a Playstation 2 last Christmas for the kids and helped purchase some new clothing before this school year started. An aunt bought a computer to aid the children’s schoolwork and help keep Castillo in touch with family members who were scattered across the country by Katrina.

But the amount of assistance she’s received in the past year hasn’t matched her losses. From the Federal Emergency Management Agency, Castillo received $2,000 in immediate household assistance and $676 in rental aid in the first three months of 2006. At the end of last October, she received a post-inspection settlement for her New Orleans home of $10,391 and, expecting further assistance for rent and utilities, quickly spent $2,000 on a down payment for a 1999 Chrysler.

Since then, she has been on her own despite repeated appeals for assistance from the federal agency.

From Breaking Even to Broke

Like many Americans struggling to stay in the middle-class income bracket–defined by the U.S. Census Bureau as $25,000 to $100,000 in income a year for a family of four–Castillo had little savings when Katrina hit. Her main investments–her car, household appliances and furniture–were all swept away in the storm. Their ruined house in New Orleans East still sits empty in a city that has largely failed to recoup its numbers and vitality since the nation’s largest natural disaster struck it on Aug. 29, 2005.

In an August USA Today/Gallup poll of New Orleans natives, half reported taking a “major hit” financially or that they “lost everything.” A further 38 percent claimed some losses due to the storm. Overall, Katrina losses are estimated to be as high as $150 billion.

On top of significant losses, Katrina survivors face a myriad of challenges that cripple the efforts of low-income families to achieve self-sufficiency under normal circumstances, such as low-paying jobs, irregular hours, and lack of benefits and affordable health care.

With initial outpourings of sympathy drying up due to donor fatigue, Katrina survivors must now also contend with a reduced social response.

“There is a rhetoric of social responsibility being applied to evacuees, particularly towards so-called ‘welfare moms,’ that sees them being viewed as not worthy of sympathy or support,” says Jacquelyn Litt, professor of sociology at Iowa State University. “At the same time, these people are faced with the very real challenges of surviving day to day having lost everything.”

Now insured: former New Orleans home.

Katrina-affected families found that while their cars, houses and credit cards may have disappeared, the obligation to pay them remained even as thousands of families like the Castillos went months without a steady paycheck to lean on.

Castillo did get one additional piece of financial news over the summer: their destroyed home in New Orleans would be insured for the 2006 season.

“The idea was just so ridiculous I laughed out loud,” Castillo says bitterly.

Post-Hurricane Patterns

The sheer scope of Katrina’s wrath was unparalleled leaving analysts with no comparable financial data, but historical hurricane-related figures do point toward undue hardship.

Bankruptcy filings increase up to 50 percent following a hurricane, according to a study of major storms between 1980-2001 that caused damage of $1 billion or more by Robert Lawless, a law professor at the University of Illinois. Filings see their highest increases between 12 and 36 months after the storm.

“Most people struggle for quite a while before filing for bankruptcy normally and here we have a situation unprecedented in scale,” says Lawless.

Katrina survivors also faced the prospect of tougher bankruptcy filing restrictions, which came into force less than two months after the storm hit. Federal officials waived the new pre-filing credit counseling and gave bankruptcy trustees some discretion, but the waivers were temporary and did not place any limit on the objections of creditors, while filing fees to initiate bankruptcy proceedings more than doubled from about $800 to $2,000.

For Castillo, a grim determination has taken hold in spite of the substantial post-Katrina financial struggles.

“It’s hard to keep going, but you can’t just sit down and say, OK, I’m through trying,” she says. “You have to keep telling yourself if you keep working at it things will get better, and somehow, I believe, they will.”

Juliette Terzieff is a freelance journalist currently based in Buffalo, N.Y., who has worked for the San Francisco Chronicle, Newsweek, CNN International and the London Sunday Times during time spent in the Balkans, the Middle East and South Asia.

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For more information:

“After Katrina: One Surviving Family’s Story”:

Institute for Women’s Policy Research, “The Women of New Orleans and the Gulf Coast: Multiple Disadvantages and Key Assets for Recovery, Part I Poverty, Race, Gender, and Class”

Institute for Women’s Policy Research, “The Women of New Orleans and the Gulf Coast: Multiple Disadvantages and Key Assets for Recovery, Part II Gender, Race, and Class in the Labor Market”