How to Deal With Debt During COVID-19.

As of recent, over 33 million Americans have registered for unemployment. The American economy is suffering greatly, and many states have issued a shelter-in-place order to prevent the spread of COVID-19. Back in late March, President Donald J. Trump signed the CARES Act to lessen the financial impact of the pandemic. Slowly, states will start to lift their lockdown restrictions and the economy will hopefully snap-back.

If you are still expecting to receive your $1200 stimulus check through the mail, the last 150 million are said to go out in early May. There is even discussion for the second round of stimulus checks. Check out this article to learn more: “Is a Second Round of Stimulus Checks for $2,000 Each Month in Our Future?” by Yahoo.

If you have a small business, there is the Paycheck Protection Program within the CARES Act that was designed to help small business owners pay their employees while their businesses are temporarily shut-down.  Unfortunately, much of that money landed in the hands of big businesses who were posing as small businesses. Congress responded quickly by approving another $320 billion and claimed it would spend more time qualifying recipients to prevent national chain companies from getting relief money.

 

Even with government relief programs, millions of Americans are falling deeper and deeper into debt. Here are some tips to hopefully help you during this difficult time:

 

Contact Your Financial Institutions. When your income has been reduced or eliminated as a result of the outbreak, immediately contact each of your creditors and let them know about your situation. Tell them how coronavirus has impacted your ability to pay your bills and inquire about options for financial relief.

In response to the COVID-19 crisis, the Federal Deposit Insurance Corporation (FDIC) recommended financial institutions to find ways to help costumers cope with their financial hardships during this pandemic. So, many institutions have announced options for impacted consumers, including the possibility of lower monthly payments, relief from late fees, lower interest rates, and more.

Here is a link to an extensive list of financial institutions that have provided specific guidance on how they can aid you during this time: “COVID-19 (Coronavirus) Credit Card and Debt Relief by Experian. If you can’t find your financial institution on the list, don’t be afraid to still reach out and inquire about possible relief.

 

Get Free Financial Planning. Many financial advisors across the United States are offering pro bono, or free, financial advice for people who were negatively impacted by COVID-19. Check out the XT Planning Network to help you find your perfect financial advisor.

 

Ask if You Qualify for Student Loan Relief. President Donald J. Trump announced he is waiving interest on student loans held by the federal government until September 30, 2020. The CARES Act also allows you to waive any student loan payments until September 30, 2020.

The waiver doesn’t apply to three types of student loans: (1) state loans, (2) private loans, and (3) the majority of Federal Family Education Loans (including Sallie Mae student loans). Borrowers will still be required to pay their monthly bills, but the payments will go towards a principal balance instead of interest.

If you don’t qualify for any relief provided by the CARES Act and you’re struggling to make your payments, the office of Federal Student Aid recommends you contact your loan servicer as soon as possible. The Federal Student Aid also has a FAQ page to answer any further possible questions you may have.

 

Get In-Touch with Your Utilities, Phone, and Internet Providers. Many government bodies across the United States have ordered disconnection suspensions for low-income and senior customers. Check out the Energy and Policy Institute’s Live Updates for more information or the Federal Communication Commission’s website for a full list of companies who are providing relief for their customers.

Many phone and Internet services are also postponing shutoffs. Call up your utilities, phone, and Internet services, tell them about your situation, and ask if you can waive any late fees.

 

Call Your Mortgage Servicer. As soon as you realize that you are having trouble making your payments, call your loan servicer and inform them about your situation. Have a discussion with your mortgage servicer on forbearance or other forms of short-term immediate mortgage relief and ask you to qualify for any benefits under the CARES Act.

The CARES Act also imposes a 60-day foreclosure moratorium for federally backed mortgage loans, including loans purchased or securitized by (1) Fannie Mae or Freddie Mac, (2) FHA-insured loans, (3) loans insured or guaranteed by the VA, and (4) loans made, guaranteed, or insured by the Department of Agriculture. This moratorium covers the majority of residential mortgage loans in the country.

Also, many states have also imposed temporary foreclosure moratorium, and many countries are suspending sheriff’s sales and evictions.

 

File for Unemployment. If you have lost your job as a result of the outbreak, please file for unemployment as quickly as possible. The average payout for unemployment is $300 a week and the last 26 weeks, and because of recent circumstances, the timetable has been expanded to 39 weeks and freelancers and gig workers would also qualify. In addition, if you are unable to work because of issues related to COVID-19, you will be able to receive an “added benefit” of $600 per week for four months.

 

Get Paid Sick Leave. Congress passed a bill called the Families First Coronavirus Response Act to help workers in small businesses with less than 500 employees. There are many qualifiers for this program, so please check with your company’s HR department before making plans.

The possible benefits can include (1) getting two weeks of paid family and medical leave at two-thirds your regular pay rate to care for an individual subject to quarantine. (2) get an additional 10 weeks paid family and medical leave at two-thirds pay, up to $200 a day (and $10,000 aggregate), if you’re a parent caring for children whose school has closed.

Those companies will receive a tax credit on next year’s tax bill to offset the cost of providing it to their employees.

 

Avoid Scammers. The Federal Trade Commission has posted a warning about scammers who are taking advantage of panic-stricken citizens. Click here for more information: FTC Scam Alerts

Here are a couple of takeaways:

(1) Don’t click on links from sources you don’t recognize.

(2) Ignore emails claiming they are the CDC.

(3) Avoid online advertisements and offer vaccinations and treatments.

(4) Be wary of “investment opportunities” in companies who say it can detect, prevent, or cure COVID-19

 

Recourses

Cfpb –. “Protect Yourself Financially from the Impact of the Coronavirus.” Consumer Financial Protection Bureau, 3 Apr. 2020, www.consumerfinance.gov/about-us/blog/protect-yourself-financially-from-impact-of-coronavirus/.

“COVID-19 (Coronavirus) Credit Card and Debt Relief.” Experian, 28 Apr. 2020, www.experian.com/blogs/ask-experian/covid-19-resource/.

Kostaras, Samantha, and Trent. “Where to Find Financial Relief During Coronavirus (COVID-19).” The Simple Dollar, 7 May 2020, www.thesimpledollar.com/financial-wellness/coronavirus-financial-assistance/.

Loftsgordon, Amy. “Coronavirus: Dealing With Debt.” Www.nolo.com, Nolo, 5 May 2020, www.nolo.com/legal-encyclopedia/coronavirus-dealing-with-debt.html.

Writer, AuthorBill FayStaff. “Financial Assistance for Those Impacted by Coronavirus, COVID-19.” Debt.org, 2 May 2020, www.debt.org/advice/relief-options/coronavirus-covid-19-financial-assistance/.

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