Dealing With Debt During the COVID-19 Pandemic

What to do if you’re having trouble paying your debts, like your student loans and other bills, because of COVID.

By , Attorney

The COVID-19 pandemic has transformed how we run our lives and our workplaces. Many people faced a reduction in income or job loss and found it difficult to keep up with student loan payments, mortgage bills, credit card debts, and other bills.

In this article, you'll get information about various options that might be available to you if you're worried about falling behind on certain payments because of COVID.

Federal Student Loan Payments Are on Pause

On November 22, 2022, the Biden Administration announced that the U.S. Department of Education will extend the suspension of most federal student loan payments while its student loan debt cancellation program is tied up in the courts. Payments will resume:

  • 60 days after the debt cancellation program is implemented
  • 60 days after the lawsuits are resolved, or
  • 60 days after June 30, 2023, if the program has not been implemented and the litigation has not been resolved by then.

Collection actions, wage garnishments, and Treasury offsets, like tax refund offsets and Social Security intercepts, for defaulted federal student loans are also paused during this time.

How to Get Mortgage Help During the COVID Pandemic

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 a COVID-19 forbearance if you have a federally backed mortgage loan, or another form of short-term immediate mortgage relief, like a waiver of late fees.

Or you might qualify for assistance from your state's Homeowner Assistance Fund program. You could be eligible to get free money from the government to pay your mortgage and other housing-related costs.

Foreclosure Suspensions During the COVID Pandemic

While most of the state-imposed foreclosure moratoriums and the national foreclosure moratorium for federally backed mortgage loans have expired, a few places still have emergency foreclosure moratoriums and bans on evictions in place due to the COVID-19 pandemic.

Property Tax Foreclosures and Tax Sales Postponed in Many Places

If you're behind in paying your property taxes, certain counties declared 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.

Credit Cards, Personal Loans, Small Business Loans

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 pandemic. 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.

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 COVID.

Utilities, Phone, Internet

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.

Auto Loans

Lenders are offering payment delays and other alternatives to those who will have trouble making their car payments.

Getting Help

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 COVID 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. If you need help dealing with your creditors, consider enlisting the help of a debt settlement lawyer.

And if you have a lot of debts you can't pay, you might want to consider filing for bankruptcy. In that situation, you'll want to talk to a bankruptcy lawyer.

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