Coronavirus (COVID-19) is severely transforming how we run our lives and our workplaces. Many people face a reduction in income or job loss altogether and will find it challenging to keep up with their student loans, mortgage payments, credit card bills, and other debts.
In this article, you’ll get information about various options that might be available to you if you're worried about falling behind in bill payments, as well as what you can do to try to protect your credit during this crisis.
The federal “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act” (H.R. 748), which President Trump signed into law on March 27, 2020, suspends payments (and interest won't accrue) on federal student loans held by the U.S. Department of Education for six months, until September 30, 2020. The payment suspension is automatic, you don't have to request it.
The Act also stops collection actions, wage garnishments, and Treasury offsets, and prohibits negative credit reporting during the coronavirus national emergency. (To learn about different options if you’re having trouble paying your federal student loans due to COVID-19, read How to Manage Your Federal Student Loans During the Coronavirus Outbreak.)
As soon as you realize you’ll have trouble making your next mortgage payment, call your loan servicer to learn what options might be available to you. You could be eligible for a forbearance, like under the CARES Act, or another form of short-term immediate mortgage relief, like a waiver of late fees. (If you’ve recently fallen behind on mortgage payments, or think you soon will, due to coronavirus, read How to Get Mortgage Payment Relief During the Coronavirus Outbreak.)
The CARES Act also imposes a 60-day foreclosure moratorium for federally backed mortgage loans, including loans purchased or securitized by Fannie Mae or Freddie Mac, FHA-insured loans, loans insured or guaranteed by the VA, and loans made, guaranteed, or insured by the Department of Agriculture. This moratorium covers the majority of residential mortgage loans in the country.
Many states have imposed a temporary foreclosure moratorium as well. Numerous counties are suspending sheriff’s sales and evictions indefinitely due to the COVID-19 outbreak. Courts, too, across the U.S., are shutting down to halt the spread of the virus and are postponing foreclosure hearings as part of the process. (To get details about these and other foreclosure freezes across the county and to find out about existing laws that could protect you against a foreclosure, see Coronavirus: Foreclosure Relief.)
If you're behind in paying your property taxes, certain counties are declaring a moratorium on property tax foreclosures and tax sales. Call your county treasurer’s office or look online to see if your area has a moratorium.
Many credit card issuers, including Capital One, Chase, Citi, U.S. Bank, Wells Fargo, and others, have released statements on their websites announcing several kinds of assistance for consumers during the COVID-19 outbreak. Available help includes credit line increases, collection forbearance, and skipped payments.
Banks, credit unions, and other financial institutions are offering loan extensions and deferred payment options, among other things, if you'll have trouble making payments on a personal loan or small business loan. (For more information about potential relief if you can’t make payments on a personal loan, small business loan, or credit card debt, read Dealing With Loans and Credit Card Debt You Can't Pay After COVID-19.)
If you need money to make ends meet, different lenders and the U.S. Small Business Administration (SBA) are offering loans to those affected by coronavirus.
Many government bodies, like in California, Connecticut, District of Columbia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Vermont, Virginia, West Virginia (where regulators have urged a suspension of disconnections), and Wisconsin have ordered a moratorium on utility shutoffs. Some utility companies have also implemented a shutoff moratorium. To find a regularly-updated list of states and companies that have implemented disconnection suspensions, go to the Energy and Policy Institute website and also the Federal Communications Commission website.
Many phone and Internet providers, too, are waiving late fees and postponing shutoffs. Some providers are giving free Internet service to new customers or unlimited data to current customers for a limited amount of time, like 60 days.
Lenders are offering payment delays and other alternatives to those who will have trouble making their car payments.
You should review your credit reports regularly. Under federal law, you’re entitled to a free copy of your credit report every 12 months from each of the three nationwide credit bureaus (Equifax, Experian, and TransUnion). As part of a court settlement, you can get up to six copies of your Equifax credit report each year, for free.
Under the CARES Act, if you make an agreement with a creditor to defer one or more payments, make a partial payment, forbear any delinquent amounts, modify a loan or contract, or get any other assistance or relief (called an "accommodation" under the law) because you were affected by COVID-19, the creditor can't report the account as delinquent to the credit reporting agencies if you weren't already delinquent. But you have to come to an agreement with the creditor first to avoid adverse reporting, and you have to stick to the terms of the agreement. Don't unilaterally stop making your payments, delay your payments, or pay less than you're supposed to. If you were already delinquent at the time of the agreement, the creditor can keep reporting the delinquent status unless you bring the account current. In the case of a charge off, the creditor may continue to report it as a charge off.
If you come to an agreement with the creditor, and the creditor improperly reports the delinquency to the credit reporting bureaus, you may dispute it. If your dispute doesn't resolve the issue, you can add an explanatory statement to your credit report. Keep your explanation brief—100 words or less is best—so that the agency is more likely to use your unedited statement. For example, you might say something like, “The delinquent accounts showing on my credit report were because my employer significantly reduced my work hours due to the coronavirus outbreak. I intend to make up the payments as soon as I can.” After you file your statement with the credit reporting agency, the agency has to include your comment (or a summary of it) in any report that includes this information. You might also consider filing a lawsuit to force the creditor to remove the information.
When you're sure that your income will be reduced or eliminated as a result of COVID-19, contact each of your creditors to let them know about your situation. Tell them how coronavirus has impacted your ability to pay your account and inquire about options for financial relief. If you're not happy with the alternatives, feel free to ask if any other options are available for you to consider. The more you know about your choices, the more likely you'll be able to come to an agreement that works for your circumstances.