Millions wonder how they will meet the coming month’s financial obligations due to how this pandemic has changed day to day life. The magnitude and spread of Covid-19 led both state and federal governments to offer relief through legislative measures, court decisions, and executive orders to tackle the developing crisis.
Each measure seeks to address the immediate need for payment relief. But what happens when the assistance ends. Will consumers face a worse financial position when the bills once again come due?
Consider both the short-term relief and the long-term responsibilities of accepting aid.
Loans backed by Fannie Mae and Freddie Mac (two-thirds of US mortgages) allow consumers to request a forbearance for up to 12 months. Many banks also offer payment suspension plans for non-government backed home loans.
Between federal regulations and state or county executive orders, most tenants also have the opportunity to miss rent payments because of the widespread moratorium on evictions. In some cases, companies will even waive late fees and penalties associated with the delayed payments.
The Department of Education waived loan interest on federally held student loans for 60 days starting March 13, 2020 and approved a 60-day administrative forbearance for borrowers requesting help. Delinquent loans automatically move to the administrative forbearance to prevent the debt from becoming further delinquent.
While some states currently ban repossessions, borrowers who anticipate payment challenges should contact the lender immediately. Many lenders have new assistance programs for consumers affected by the pandemic.
Credit card companies are working directly with consumers affected by COVID-19. Assistance can include suspended payments, lower interest, no late fee charges, and in some cases, increased lines of credit. Card servicers offer help on a case-by-case basis, meaning not everyone will qualify for the same relief.
Due to the long-term consequences of some levels of assistance, consumers must choose what relief to accept. Most payment help requires consumers to reach out to lenders before receiving concessions. Some support, such as skipping the rent for one or more months, could create a financial hardship down the road. Others, including student loan deferments and credit card payment waivers, will likely bring needed relief without adverse long-term effects.
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.