Your Coronavirus Debt Relief Guide

By leemartinc

As the American unemployment rate is continuing to escalate due to the coronavirus, it’s important to know your options when it comes to debt relief and planning.  

There are two schools of thought you should keep in mind when it comes to debt relief: 

  • What can I do in the short-term to avoid mounting debt?
  • How can I plan for the long-term?  

The first thing you should do is to understand your employment rights and the options available to you if you’re unemployed.  

Coronavirus debt relief starts with your employment rights

If you are employed your rights under the Families First Coronavirus Response Act (FFCRA) will be in effect through December 31, 2020. The FFCRA has prepared a guide to employment issues during a pandemic and continues to enforce the country’s employment non-discrimination laws staying consistent with public health guidelines. 

If you’ve been fired from your job permanently due to the pandemic, apply for unemployment through your state if you haven’t already. You should be able to apply online via the website of the state in which you reside. 

Your landlord or mortgage broker could help relieve debt

If you’re paying a mortgage for your home, reach out to your broker and let them know you’re struggling to make your bills. Your lender would much rather work with you on making payment arrangements during this crisis than foreclose on your house. Bankrate.com offers a list of statements from banks offering hardship assistance during the coronavirus. 

If you’re a renter, the CARES Act, along with many cities and states, have banned evictions during the Coronavirus pandemic. But there are also proactive steps you should take so you remain in good standing with your landlord.  

  1. First and foremost, communicate with your landlord. Let them know you’re unable to make your rent and why. Be honest. 
  2. If you’ve been furloughed or have lost your job, provide proof of your unemployment status to your landlord, as he or she will most likely request it. You may even be required to provide a financial statement of your current situation. 
  3. Ask your landlord if you can pay a portion of your rent and then defer the remaining balance. 
  4. If you’re unable to work out a payment plan with your landlord, go to the Department of Housing and Urban Development website to see if there is any government assistance available. You can also see what other financial programs are being offered through Catholic Charities, your local Salvation Army, and other charitable organizations in your area. 

Contact your utilities company for some debt relief

Like with your mortgage broker or landlord, the key here is to communicate with your utilities company if you’re unable to make your bills. Most likely they have a program already in place for situations like yours due to the pandemic. If you can, work out a deal where you can pay some of your bills now to avoid a larger bill down the road. Many companies have a bill pay program that averages your bills for the year and splits that total cost into equal monthly payments. If you’re worried about your utilities being shut off, most likely your company will not go that route during COVID-19. But you need to call or go to their website to make sure, and if possible, talk to a customer service representative.  

Auto insurance coverage may return your premium

Not as many people are driving during the pandemic, so there are many car insurance companies that will give back a portion of the policyholder premium. But you’ll need to contact your insurance company or go to their website to see if your insurance is participating. 

Check on any other bills you may have 

Other bills like credit cards and mobile phone plans probably have special payment programs for customers who aren’t able to pay their bills during the coronavirus. It’s important to go to each of these companies’ websites and find out their pandemic policies. Even if they don’t offer special payment plans for those affected by the coronavirus, you should still reach out to them to see if they can work with you on an individual basis. 

For example, if you have federal student loans, borrowers are qualified to be placed in an administrative forbearance, which allows you to stop making loan payments until September 30, 2020. But you are able to still make payments if you choose. Go to the Federal Student Aid website for more information. 

Any subscription services you may have, like music and video streaming services should be evaluated into your priorities. If you can go without any of these services, it would be a good idea to cancel them temporarily. 

Create your coronavirus debt relief budget

Now, make a list of all your bills using this worksheet or one like it. Then determine what is essential and what you can do without. Out of the essential bills, prioritize what needs to be paid first, based on any leniency from utility, credit card or insurance companies offering such programs. It’s important to get a total picture of your monthly payments so you can properly determine how best to budget. 

If your bills outweigh the money coming in, cut what you can. If you can’t cut any more bills, then see if you can find a temp job if possible through a temp agency. Do you have any services you could offer customers on a freelance basis? If you do, social media is a great way to advertise your abilities. 

Try not to panic

The important thing is to try not to panic. Of course, this is easier said than done. Reacting out of emotion without thinking through all of your financial options is almost never a good idea. This requires a delicate balance of short-term and long-term planning. You need to stay afloat now and for months to come, but you also need to try to work toward future financial stability. If you can, put money into savings, even if it’s $25 a month. Having a savings account will save you over time when large, unexpected expenses arise. 

Stay positive and focused to meet your debt relief goals 

Remember, this too shall pass. It’s important to stay focused and set goals. Communicate as often as necessary with all of the financial institutions and companies with which you have bills. Millions of people are going through the same thing. This means most companies are absolutely willing to work with you as much as they can. Stay vigilant, you got this!