The COVID-19 pandemic has caused a lot of uncertainty and disruption, and for many, personal finances have been especially hard hit. While many Americans are experiencing layoffs, furloughs, reduced work hours and pay cuts, the bills keep coming in. Obviously, paying all of your bills before they come due is extremely important, and is one of the best ways to maximize your credit score and avoid a pileup of debt, but if you’ve lost your job or had your income severely reduced, the truth is that you may be struggling. In this type of situation, it’s important to evaluate your financial obligations to determine which bills should be paid immediately, and which ones you may be able to delay payment on.
Housing
Aside from food and water, shelter is the number one human priority. If you’re having trouble paying your rent or mortgage, check with your mortgage lender or landlord to see if they are willing to work with you. While the CARES Act puts a 120-day moratorium on evictions for tenants who reside in rental properties that are part of a government program, many states have issued eviction freezes of their own. Massachusetts, for example, has issued a temporary freeze on all non-essential evictions for tenants who cannot pay rent due to a COVID-19 related hardship. Rhode Island has also suspended all eviction filings and court hearings through at least May 17, 2020.
One way to negotiate with your landlord is to write an email stressing that you have been a responsible tenant in the past, but have lost income because of the pandemic. Your letter should outline the specific arrangement you’re seeking. For example: waiver of rent, reduced rent, or a deferred rent payment. Be sure to let your landlord know that if he or she grants this accommodation, you will be able to meet your obligations. Then, thank them for considering your request.
Homeowners who are having trouble making their mortgage payments have options as well. For those who have a federally-backed mortgage, such as a Fannie Mae, Freddie Mac, FHA, VA, or USDA loan, the CARES Act provides that lenders cannot begin foreclosure proceedings, or continue those that have been started, for at least 60 days after March 18, 2020. The Act also gives those with federally-backed mortgages the right to request forbearance, which can delay your mortgage payments for up to 180 days. You must contact your lender to request this option.
Even if your mortgage is not backed by a government program, it’s possible that you could still qualify for help by contacting your mortgage lender. Many local banks in RI and MA have signed a pledge to provide up to a 90-day forbearance of mortgage payments due to COVID-19 related hardships. If you request mortgage forbearance from your lender, just be sure you understand what will happen after the deferment period. In other words, will your monthly payments go up once the forbearance period ends? Will all of the missed payments be due once the forgiveness period is over? Will the delayed payments be deferred until the end of your mortgage, in the form of a one-time balloon payment? It’s also important to ask about how forbearance may impact your credit.
Utilities
After housing, your next priority should definitely be ensuring that your utilities are not shut off. If you are struggling financially, you may be able to delay utility payments or enter into an extended payment arrangement by contacting your utility provider. Massachusetts has instructed utility companies not to shut off gas, electric, or water services during the current state of emergency. Rhode Island has issued a similar directive through at least May 8, 2020. Many internet and phone providers, such as Verizon, AT&T, and Comcast, have also agreed not to cut off service during this time. If you need to delay a utility payment due to a COVID-19 related hardship, you should call your provider and discuss your situation.
Transportation
Another top priority should be securing your transportation, especially if it’s needed to get you to and from your job. If you fail to make a car payment under normal circumstances, your vehicle could be repossessed. Many major car companies, such as Toyota and Nissan, are offering payment deferrals on their financing and leases. Many bank lenders are also allowing payment deferrals for auto loans. Just remember that these kinds of car payment deferrals are not automatic or promised, but may possibly be obtained by contacting your lender.
Child Support
During the coronavirus pandemic, it’s important to remember that you are expected to keep up with any child support payments you may have. All 50 states can suspend your driver's license or garnish wages if you fail to meet this obligation. Past-due child support payments can also be deducted from any stimulus money you may receive. If you are struggling to keep up with child support payments, you may consider reaching out to your child’s mother or father to ask for accommodation.
Other bills
You may also be able to delay payments on credit cards, personal loans, and medical bills. Many credit card companies, lenders, and medical billing companies are allowing bill payment deferment, but you’ll need to be proactive about asking for help. You can find out whether you qualify by contacting creditors and explaining your situation. Be sure to ask about any potential effects the deferment might have on your credit score. Deferral of back tax payments and student loans may also be negotiated. Certain federal student loans may allow bill payments to be delayed through September 2020, while the deadline for filing federal taxes, and making any payments due, has already been moved to July 15, 2020.
If you’re experiencing financial difficulty due to the coronavirus pandemic, you’re not alone. But if your COVID-19 hardship will prevent you from making all of your bill payments on time, it’s critical to remember the importance of communication. By proactively communicating with your lenders and service providers, you’ll have the best chance of reaching a mutually beneficial arrangement, and minimizing negative impact to your everyday life and credit history.
Housing
Aside from food and water, shelter is the number one human priority. If you’re having trouble paying your rent or mortgage, check with your mortgage lender or landlord to see if they are willing to work with you. While the CARES Act puts a 120-day moratorium on evictions for tenants who reside in rental properties that are part of a government program, many states have issued eviction freezes of their own. Massachusetts, for example, has issued a temporary freeze on all non-essential evictions for tenants who cannot pay rent due to a COVID-19 related hardship. Rhode Island has also suspended all eviction filings and court hearings through at least May 17, 2020.
One way to negotiate with your landlord is to write an email stressing that you have been a responsible tenant in the past, but have lost income because of the pandemic. Your letter should outline the specific arrangement you’re seeking. For example: waiver of rent, reduced rent, or a deferred rent payment. Be sure to let your landlord know that if he or she grants this accommodation, you will be able to meet your obligations. Then, thank them for considering your request.
Homeowners who are having trouble making their mortgage payments have options as well. For those who have a federally-backed mortgage, such as a Fannie Mae, Freddie Mac, FHA, VA, or USDA loan, the CARES Act provides that lenders cannot begin foreclosure proceedings, or continue those that have been started, for at least 60 days after March 18, 2020. The Act also gives those with federally-backed mortgages the right to request forbearance, which can delay your mortgage payments for up to 180 days. You must contact your lender to request this option.
Even if your mortgage is not backed by a government program, it’s possible that you could still qualify for help by contacting your mortgage lender. Many local banks in RI and MA have signed a pledge to provide up to a 90-day forbearance of mortgage payments due to COVID-19 related hardships. If you request mortgage forbearance from your lender, just be sure you understand what will happen after the deferment period. In other words, will your monthly payments go up once the forbearance period ends? Will all of the missed payments be due once the forgiveness period is over? Will the delayed payments be deferred until the end of your mortgage, in the form of a one-time balloon payment? It’s also important to ask about how forbearance may impact your credit.
Utilities
After housing, your next priority should definitely be ensuring that your utilities are not shut off. If you are struggling financially, you may be able to delay utility payments or enter into an extended payment arrangement by contacting your utility provider. Massachusetts has instructed utility companies not to shut off gas, electric, or water services during the current state of emergency. Rhode Island has issued a similar directive through at least May 8, 2020. Many internet and phone providers, such as Verizon, AT&T, and Comcast, have also agreed not to cut off service during this time. If you need to delay a utility payment due to a COVID-19 related hardship, you should call your provider and discuss your situation.
Transportation
Another top priority should be securing your transportation, especially if it’s needed to get you to and from your job. If you fail to make a car payment under normal circumstances, your vehicle could be repossessed. Many major car companies, such as Toyota and Nissan, are offering payment deferrals on their financing and leases. Many bank lenders are also allowing payment deferrals for auto loans. Just remember that these kinds of car payment deferrals are not automatic or promised, but may possibly be obtained by contacting your lender.
Child Support
During the coronavirus pandemic, it’s important to remember that you are expected to keep up with any child support payments you may have. All 50 states can suspend your driver's license or garnish wages if you fail to meet this obligation. Past-due child support payments can also be deducted from any stimulus money you may receive. If you are struggling to keep up with child support payments, you may consider reaching out to your child’s mother or father to ask for accommodation.
Other bills
You may also be able to delay payments on credit cards, personal loans, and medical bills. Many credit card companies, lenders, and medical billing companies are allowing bill payment deferment, but you’ll need to be proactive about asking for help. You can find out whether you qualify by contacting creditors and explaining your situation. Be sure to ask about any potential effects the deferment might have on your credit score. Deferral of back tax payments and student loans may also be negotiated. Certain federal student loans may allow bill payments to be delayed through September 2020, while the deadline for filing federal taxes, and making any payments due, has already been moved to July 15, 2020.
If you’re experiencing financial difficulty due to the coronavirus pandemic, you’re not alone. But if your COVID-19 hardship will prevent you from making all of your bill payments on time, it’s critical to remember the importance of communication. By proactively communicating with your lenders and service providers, you’ll have the best chance of reaching a mutually beneficial arrangement, and minimizing negative impact to your everyday life and credit history.