(Blog) Coronavirus & Debt: Options To Consider If You Can't Pay Your Bills

Coronavirus & Debt: Options To Consider If You Can't Pay Your Bills

No matter where you live in the United States, there’s a good chance that the coronavirus pandemic has affected your finances in some way. According to an April 2020 study by the credit reporting agency TransUnion, 61% of U.S. consumers have been financially impacted by the global health crisis. The average affected consumer anticipates that he or she is just a little over 6 weeks away from not being able to pay bills or loans.

On a positive note, the federal and numerous state governments have taken steps to support those who have lost their jobs or are earning less during the pandemic. Many companies are also offering help to those who are struggling financially.

Read on to discover some strategies and resources that you may be able to use if you can’t afford to pay your bills due to the coronavirus crisis.

Reach Out to Your Utility Companies

If your income has been affected by the COVID-19 pandemic, one of the first steps you should take is to switch to a temporary crisis budget. An essentials-only budget will likely require some spending cuts, perhaps even where your utility services are concerned. For example, you might consider canceling non-essential services (like cable or satellite) or lowering your current mobile phone plan to a cheaper option.

Certain utilities, however, fall under the essentials category. But if you’re having money problems, paying for even the basics could be a challenge. Thankfully, many utility providers and telecommunications companies are offering temporary relief to customers impacted by the coronavirus crisis.

In some states including Indiana, Texas and Connecticut, the special accommodations are mandatory. Elsewhere, companies may be willingly offering aid and adjusting policies on their own. In either case, you’ll need to proactively reach out to your utility company to see if any hardship relief is available to you.

Keep in mind that even if your utility provider does offer you a period of reprieve, there may be a catch. Your bill likely won’t be forgiven. Therefore, it’s wise to pay as much as you can afford each month. Doing so may help you avoid running up a high balance that you’ll have to deal with in the future.

Contact Your Creditors and Lenders

Aside from utility providers, other companies you owe money to each month may also have special hardship programs available during the COVID-19 crisis. Again, some payment relief is mandated by federal and state governments while other hardship options are being offered on a voluntary basis.

With federal student loans, for example, the federal government has given many borrowers an automatic six-month break from both payments and interest, valid until September 30, 2020. The CARES Act, which President Trump signed into law on March 27, 2020, also provides mortgage relief for borrowers with federally-backed home loans.

Your bank or credit union may offer forbearance, deferment or other forms of financial assistance on loans you have with the institution. Many credit card issuers have amended their policies or may be offering financial hardship assistance as well.

Even if you’re financially overwhelmed, don’t skip a payment without reaching out to your creditor or lender to see if it’s willing to help. You might be pleasantly surprised. In many cases, there may even be relief options available that could help you protect your credit score until you’re back on your feet financially.

Just remember to get the full details of any relief options upfront, including what happens when the payment accommodation ends. Find out if you’ll need to make up missed payments immediately or over time. Ask how the creditor will report your account to the credit bureaus in the meantime. You should fully understand the terms and conditions, and get them in writing, before you agree to a special payment arrangement.

What’s Next?

The options above may provide you with some solutions to help survive the immediate financial crisis at hand. But if your health allows you to do so, your best bet will be to find ways to replace or boost your income as soon as possible.

Filing for expanded unemployment benefits may help you get by until you can get back to work. You can also make plans to use your stimulus check wisely to get the most mileage possible out of those extra funds.

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https://www.forbes.com/sites/advisor/2020/04/29/coronavirus-and-debt-options-to-consider-if-you-cant-afford-to-pay-your-bills/#6036eebd1dd4