If your income has been seriously impacted by the COVID-19 pandemic, you’re certainly not alone. Yet, for the most part, the bills are still coming in. We can tighten our budget when it comes to things like how much we spend on food and entertainment; however, we still have to pay for our home and utilities, and we still have loans, credit card bills and insurance premiums.
Fortunately, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed by Congress and signed in to law at the end of March, provides some mandated relief. Many companies are also offering customers a certain amount of leeway in paying their bills.
Let’s take a look at a few areas where you may be able to get some much-needed relief if you’ve been impacted financially by the pandemic.
If You’ve Fallen Behind on Your Rent
If you haven’t already, it’s important to notify your landlord as soon as possible of your situation. If you’ve lost your job or your hours have been cut, let them know if it’s temporary or if you’re looking for a new job. Offer to provide them with some documentation of your job loss/income reduction before they even ask. If you’ve been a good tenant, and have always paid your rent on time, remind them of this fact.
Most landlords appreciate tenants who take the initiative to contact them before they’re late with the rent and offer to pay what they can. Many landlords are themselves facing financial difficulties. Letting them know that you understand this is a tough time for them as well can make them more willing to work with you.
You may be able to work out a reduced payment plan or perhaps offer to do some work around the building in exchange for rent. Just make sure that you get something in writing that details specifically what agreement you and your landlord have reached.
Understand what a landlord cannot do: The CARES Act places a 120-day moratorium (beginning March 27, 2020) on evictions and late fees for failure to pay rent for people living in a “covered dwelling.” This includes housing supported by federal programs as well as single and multifamily homes that have a federally backed mortgage. Some cities and states are prohibiting evictions based on nonpayment of rent, so find out if that’s the case where you live. Don’t assume that your landlord knows the applicable regulations and will abide by them. Have that information available to show them.
Remember that rent can still accrue during any eviction moratorium. That’s why working out a reduced-payment plan with your landlord can prevent you from ending up with a massive rent bill later.
If You’ve Fallen Behind on Your Mortgage
Notify your mortgage servicer (the company to whom you send your mortgage payment) as soon as you know you won’t be able to make your next mortgage payment on time or in full. The earlier you get in touch with them, the more likely they’ll be able to work with you.
Although the 60-day moratorium on foreclosures for nonpayment provided by the CARES Act expired on May 17, homeowners still have the right to two consecutive six-month forbearances (temporary postponement of mortgage payments). You need to request a forbearance from your mortgage servicer and qualify financially. You’ll also need to declare financial hardship caused by COVID-19, but you aren’t required to provide documentation. If your servicer isn’t complying, contact the federal agency that backs your loan or the Consumer Financial Protection Board (CFPB).
If you don’t have a federally-backed mortgage (where the federal government insures a portion the loan in the event the borrower defaults on their home such as an FHA Loan, VA Loan, USDA Loan, or any mortgage backed by Fannie Mae or Freddie Mac), or if you believe you’ll need some help when you have to begin paying your mortgage again, you may be able to work out a loan modification. This might mean, for example, extending the term of your mortgage by the period where you didn’t make payments and/or reducing your interest rate.
Remember that you’ll eventually owe the payments that were due during your moratorium and forbearance(s). If you can’t repay that amount in one lump sum (and most people can’t), ask for a payment plan where you add a portion of your missed payments to each mortgage payment you make going forward until they’re repaid.
If You’ve Fallen Behind on Your Utility, Phone and/or Internet Bills
Many local utility companies, as well as phone and internet providers, are offering assistance to people who can’t pay their bills due to job loss or a cut in hours. Check the websites of your providers to find out what options they’re offering. Most electric, gas and water companies, are temporarily suspending service disconnections for nonpayment and are offering reduced rate plans. However, you need to apply for them.
As with landlords and mortgage servicers, be sure to contact these companies and providers as soon as possible if you need assistance. The CARES Act doesn’t have any provisions for vehicle loans, credit cards or private student loans. (Federal student loans are addressed.) However, many individual lenders are offering assistance. You just need to ask for it.
Tips for Negotiating Your Payments/Plans
- Connect with the right person. Make sure you’re talking with someone who can help you. If the person you initially speak to doesn’t have the authority to offer you any payment assistance or plan changes, ask to speak to someone who can. Be patient and courteous. “Who would be able to help me with this?” generally works a lot better than “I want to talk to your manager.”
Remember that most customer service departments are working with limited staff. A little extra kindness and patience, no matter how upset and frustrated you are, can go a long way.
- Bundle services. This can help you save money on internet/phone services, insurance and more. The more services or products you have with the same company, the more they’re likely to value you as a customer. It’s also typically more convenient to have one provider rather than several. However, be careful about taking advantage of deals that will expire after a few months.
- Reduce credit card debt. If you have less money coming in, you may be using your credit cards more than usual or for things you never used them for previously, like groceries or gas. If you’re not able to pay off your balances, make sure that you’re using the credit cards with the lowest interest rates. Many credit card providers are temporarily lowering interest rates and waiving late fees, so go to their websites and see what yours is offering. Contact them to see what you can work out. When you’re able to, you may want to consider consolidating your credit card debt.
- Get it in writing. Make sure you get email confirmation or other documentation of any agreement to delay payment, or change any terms or price, and save it. Make sure that your next bill reflects the correct amount. If a company or provider has agreed not to take negative action, like repossessing your car or charging penalties or late fees, be sure they document how much you do owe and when.
- Keep an eye on your credit reports. Be sure nothing negative has been reported if you’ve made arrangements to delay payments. The CARES Act states that lenders cannot report borrowers late on payments if they’ve contacted them for assistance. The three major credit reporting agencies are offering free weekly credit reports through April 2021. You can go to AnnualCreditReport.com.
If you need additional financial assistance, it’s often best to start at the local level. It’s typically faster and easier to get money from a city, county or even community program than through state or federal ones. Find out what kind of assistance programs your city or county is offering. Nonprofit organizations may be able to help as well. See what’s available. Your local newspaper and local government websites should have information.