Businesses shut down, and cities and states across the country are mandating quarantines in response to Covid-19. Unemployment rose from 3.5% in February to 3.4 million unemployment claims filed in the week of March 15, 2020. The US Bureau of Labor & Statistics estimations job losses in March will reach between 5 and 6 million. Although the actual numbers will not be available until the April report, which comes out in May.
Before the pandemic began, nearly 40% of Americans did not have enough money saved to cover an unexpected expense of $400 without borrowing money. The lack of savings, combined with mandatory closings, leaves millions of consumers unable to survive a job loss for even a few weeks. But there’s help. In fact, help is growing as states and federal money programs become available. Take action, step by step.
Immediately re-evaluate the existing budget: Adjust for the reduced household income and find ways to cut back on non-essential spending to shrink the gap between income and expenses.
Put a spending plan in place that lowers monthly expenses to the bare necessities.
File for unemployment. Even those who would ordinarily not qualify may now receive benefits due to expanded qualifications. The recently passed CARES Act now extends temporary payments for circumstances not traditionally covered.
Verify access to health care and coverage limits. The unfolding medical crisis resulted in new directives to assist with the cost of health care. Most insurers agreed to pay for testing without requiring co-pays, although those infected are still responsible for deductibles and co-pays for necessary treatment.
To assist the uninsured and recently unemployed, 11 states re-opened the health care marketplace to new enrollees, allowing residents in those states to enroll in a plan outside of the traditional sign-up window.
Because of the scale of the pandemic and its economic impact on consumers, there is help available for most US citizens. Expanded unemployment benefits, direct payments to consumers, and creditors waiving payments and late fees are a few resources available. You must ask! In most cases, consumers must ask for assistance to receive any benefits.
Workers struggling to make the minimum payment should contact their creditors immediately. Most companies are actively helping those affected by the economic shutdown due to the coronavirus.
The president issued a moratorium on evictions and foreclosures on FHA loans through April. While the order does not protect all renters and homeowners, many creditors and landlords have adopted similar policies.
The FHFA (Federal Housing Finance Agency) is working with lenders to provide payment relief extended anywhere between 30 days and 12 months. Four of the five largest US banks also agreed to waive mortgage payments for 90 days, with Bank of America pledging to join the others. While the formal bank agreement only applies to California homeowners, the financial institutions’ have committed to extending relief to homeowners across the country.
Student loan borrowers will receive 60 days of payment relief along with 0% interest on outstanding loans.
The government has not mandated specific assistance for vehicle loans, personal loans, or credit card debt. However, companies are stepping up to waive fees, offer skipped payments, and agreed not to report delinquencies to credit bureaus for anywhere from 30 to 90 days. Some lenders offer payment extensions up to 120 days for qualified account holders.
None of the above assistance programs deliver automatic relief. Consumers must contact their lender to qualify.
Given the scale of the economic crisis brought on by the pandemic, companies are anxious to help borrowers remain current on accounts. In response, lenders will work with customers directly affected by the coronavirus until the crisis eases, and consumers can return to work.
The American Fair Credit Council (AFCC) is a non-profit trade association representing consumer credit advocates who work on behalf consumers seeking to resolve their debts through the process of negotiation and settlement. AFCC Member Companies operate under a “No Advance Fee” model, and never charge a fee to consumers until a debt has been resolved. AFCC Members must also adhere to a strict “Code of Conduct”, ensuring they operate with the highest level of compliance, transparency and integrity. If you are currently experiencing a financial hardship, and having trouble making payments, you may locate a member company using our online search tool to learn more about programs to help you resolve your debt.