Your Guide to Coronavirus and Dealing with Debt

No matter what halts around us, there’s always a laundry list of constants – work obligations, bills, family needs, and all of the adult responsibilities that consume our time every single day. The pressure can stack up quite heavily, showing sure signs of exhaustion, fatigue, and overall burnout. Not to mention the current state of our nation globally, and the many rippling effects we all have felt (and are still feeling).

So, I know what you’re thinking. What’s next? How do I navigate my financial liabilities on top of everything else that requires a magic show effort of juggling? Rest assured – use these tips below to reclaim your feelings of peace and confidence with your finances during such unprecedented times.

Maintain a money mindset no matter the circumstances

There are people on each and every side of this spectrum. Whether you’ve lost your job, are working from home, caring for a loved one unexpectedly, business took a hit or you are using your emergency fund – these all can play a huge part in how we view and utilize our money.

Let’s not abandon the milestones we’ve vowed to achieve this year. Now, more than ever is a great time to be more mindful of how we are parting with our money. Tempted to shop online for things that aren’t an immediate need? Vow to throw a bit extra into your savings before you do so. Are you making more emotional purchases? Commit to step away and think about it before hitting the checkout button. The choices we make today always affect our tomorrow.

Make a list and check it twice

Make a list of all your creditors (examples are your mortgage lender, car loan, credit card accounts, student loan accounts, personal and/or business loans) and include your current outstanding balance and due date. You can use your budget to compile the list. Don’t maintain a budget regularly? No problem! Use at least two to three previous bank statements as a guide for your list. Don’t forget to include any payments that are automatically drafted through third-party applications. This will serve as a solid starting point for you to contact these companies one by one and build a plan that will help you stay on top of your expenses. 

Due to the influx of calls and inquiries from customers, many organizations have dedicated a section on their websites to answer any common questions and all the options available to you. For added security and peace of mind, don’t hesitate to contact companies so that you’re well aware of your options. Be mindful of longer hold times, but don’t allow this slight inconvenience to deter you from understanding what’s being provided as a courtesy to you. It may be tempting to procrastinate or avoid thinking about your money right now, but if you don’t contact lenders, make a plan, and try to pay at least the minimum agreed by the due date, your credit score and ability to recover financially from this time could be impacted for months or even years. 

Student loan debt

Under the federal CARES Act or Coronavirus Aid, Relief and Economic Security Act, federal student loan payments have been suspended and interest will not accrue until September 30, 2020. This is not something that you have to request. It should automatically be applied to any qualifying accounts.

For private loan borrowers, contact your lender directly as the same stipulations offered for those with loans owned by the U.S. Department of Education do not apply. Check your lender’s website for follow up details. If your question(s) have not been addressed, contact them immediately. It’s imperative to reach out as soon as possible to determine if there are non-payment options available due to COVID-19. For your personal record, be sure to maintain a log of your reason for calling, the resolution, and the representative handling your inquiry or request. This can serve as a paper trail in case any issues arise in the future.

Mortgage payments

If there’s a possibility of being unable to make a mortgage payment or delay of payment, reach out to your lender as soon as possible. The CARES Act also enforces a 60-day foreclosure and eviction moratorium for federally backed mortgage loans, effective March 18, 2020.

Below is a comprehensive list of the federal agencies and entities:

1. U.S. Department of Housing and Urban Development (HUD)
2. U.S. Department of Agriculture– USDA Direct, USDA Guaranteed
3. Federal Housing Administration (FHA) (Includes reverse mortgages)
4. U.S. Department of Veterans Affairs (VA)
5. Fannie Mae
6. Freddie Mac

If you are unsure of who owns or backs your mortgage, contact your servicer or navigate to Fannie Mae or Freddie Mac’s website for full details.

Auto loans

Many car loan lenders are offering relief programs to assist during these times, such as deferred payments or waived late fees. For specifics, go to their website and/or contact customer service. Certain lenders aren’t providing a huge level of detail online, so reach out and provide information regarding your case to yield the best options for you.

Credit cards

Unfortunately, many credit card lenders aren’t providing a ton of granular information about the options available for consumers. Be sure to check the websites regularly to stay up-to-date on the ever-changing news. In the instance your lender isn’t offering any immediate and clear guidance, here are a few questions to ask:

1. Will late fees be waived due to the pandemic?
2. If a late payment is made, will this be reported to the credit bureaus?
3. Am I able to skip or defer a payment without penalty?
4. Can my interest rate be lowered if I have no other options available to me?

Utility bills

Specific cellular companies have communicated that service will not be interrupted during this time. Since this is a hot topic worldwide, more information should be available on the website. Electricity, gas, and water companies are also offering relief to customers. If you are a frontline worker within the healthcare industry, there are also different options you’d qualify for.

Credit reports

Under the CARES Act, if you make an agreement with a creditor (partial payment, deferral or forbearance), they cannot report the account as delinquent. If the terms agreed to have been completely adhered to and your credit report reflects differently – this can be disputed.

Prioritize your creditors

Please keep in mind while it’s important to use the benefits offered during potential hardship, this is not to be used as an escape from financial obligations. If you are able to make regular payments on larger bills such as mortgage and car payments, please do so. The key here is to ensure you’re not too far behind financially after the pandemic passes enough for us to re-establish a sense of our new normalcy.

Prioritize as best as possible, and don’t give up! These effects can and will follow us for quite some time – but it doesn’t have to debilitate us completely. Stay the course – your financial health will be strengthened like never before.