How to deal with 5 instances If You Can’t repay bills Due to The Pandemic

Almost every day, we are coming across a humongous number of COVID-19 cases in our country! According to the CDC (Centers for Disease Control and Prevention), on 8th July 2020, the total number of positive coronavirus cases in our country is 3,487,780! Isn’t it shocking?

At the same time, the number of claims for unemployment benefits is rising sharply! In April 2020, the unemployment rate hit 14.7% and it’s the highest since the Great Depression! Some of the major reasons being sudden lockdown and massive loss in business!

However, according to a report by the US Bureau of Labor Statistics, the unemployment rate has reduced a bit to 11.1% in June 2020!

But the harsh fact is, many people are still unemployed or getting a pay cut due to this pandemic! And most of them are worried about finding a way out to pay bills during COVID-19!

So, if you are one of them, don’t worry, my friend! Today, we are going to discuss some of the best possible ways to consider if you can’t afford to pay off your different debts and bills!

Let’s start one by one!

Instance 1: You have student loans

On March 27, 2020, President Trump signed the CARES (Coronavirus Aid, Relief, and Economic Security) Act to provide economic assistance to the peeps of our country, affected by this pandemic!

According to the CARES Act:

  • You don’t need to make payments for your student loans until September 30, 2020. Most importantly, no interest will be accrued during this tenure!
  • All collection activities for defaulted student loans are temporarily suspended.
  • Your employer can pay up to $5,250 towards your student loan and that too tax-free till December 31, 2020.

However, you can reap the above benefits only if you have taken out a federal student loan! This includes Direct Loans, FFEL (Federal Family Education Loan Program) Loans, Perkins Loans held by the U.S. Department of Education.

If you have taken out private student loans, talk to your lender about your financial hardship asap! Many private lenders like Sallie Mae, Discover Student Loans, etc. are offering various repayment assistance to support their consumers during this pandemic!

Instance 2: You have a mortgage loan

Well, if you owe a federally or GSE-backed mortgage, the CARES Act can be your savior during this situation!

  • If you are going through financial hardship due to the COVID-19, you can request a forbearance for up to 180 days.
    But remember, mortgage forbearance can temporarily suspend or reduce your monthly payments. So, you will still owe your mortgage!
  • During the forbearance period, your lender can’t charge any interest or penalty, or late fee on you.
  • Your lender is not allowed to foreclosure on you until at least August 31, 2020.

But what if you had opted for a private mortgage loan?

In that case, talk to your lender about your financial hardships due to the COVID-19 pandemic!

Many private mortgage lenders like Ally Bank, Bank of America, etc. are offering support to their consumers by offering payment deferrals or forbearances for a certain period. So, talk to your lenders about your financial hardship asap and seek repayment assistance!

If you can’t find a way out, you can look for strategic ways to get out of student loan debt.

Instance 3: You have credit card debt

A poll reveals that almost 59% of the consumers had entered the pandemic with credit card debt! So, if you are one of them and going through financial hardship, it might be cumbersome to pay off credit card debt now!

The sad news is, the CARES Act hasn’t provided any relief for unsecured loans like credit cards. However, some credit card companies like Chase, Citi, etc. are offering repayment assistance options like reduced interest rates, allowing consumers to skip payments. So, reach out to your creditor and explain your financial situation to get repayment assistance!

But what if your creditor isn’t offering repayment assistance or if you aren’t eligible for it?  Well, in that case, if you fail to pay on time, delinquency might be reported!

Instance 4: You have rent to pay

Most probably, you are thinking whether or not you will be evicted if you fail to pay the rent! Well, the chances of eviction are likely to be less! The CARES Act has provided a 120-day moratorium on all evictions from properties financed with a federally-backed mortgage. However, this moratorium ends on July 25, 2020.

After that, if you can’t pay off your rent, your landlord can serve you a 30-day eviction notice. In that case, you need to find an alternate option within that period!

But what if you are a renter in a building with a private mortgage or the mortgage is paid off? In that case, the National Apartment Association (NAA) recommends talking to your landlord about your financial situation due to the COVID-19 pandemic.

Besides, many states, counties, and cities have issued moratoriums for evictions for at least 30 to 90 days to help renters. So, check with your local or state government to find more information about moratoriums on evictions due to the COVID-19.

Instance 5: You have to pay for your insurance

Most people are going through some kind of financial crunch due to this pandemic. And it’s becoming cumbersome for them to pay for various insurance policies during this time. That’s why most of the insurance companies are temporarily offering payment assistance.

Let’s have a detailed view:

Life insurance:

Many life insurance companies are offering extended grace periods due to this pandemic. So, make sure to pay for your life insurance after the grace period is over. Else, you might lose your term of life coverage!

However, if you have permanent life coverage, you can have options like reducing your death benefit, using dividends to pay your premiums, etc.

Auto insurance:

As coronavirus cases are rising sharply, most people are refraining from going out. And it has resulted in reduced driving! Some car insurers are refunding a certain portion of their insurance premiums to their customers.

For example, State Farm has declared to refund almost 25% of the premiums paid between March 20 and May 31!

Also, if you are going through financial hardship due to the pandemic, communicate with your auto insurer and seek some financial assistance options like:

  • Waiving off late fees and penalties
  • Extended grace period
  • Payment plans

Homeowners insurance:

Usually, if you miss your insurance payment, you will start receiving reminders after the due date is over. Most likely, you will have to shell out a hefty late fee!

But due to the pandemic, the state insurance departments urged the insurance companies to offer some flexibilities like:

  • Considering late payments
  • Setting up a payment plan
  • Not canceling coverage due to nonpayment

So, talk to your insurer and explain your financial situation. Hopefully, you will find a way out to pay for your homeowner’s insurance.

Are you eligible for a stimulus check?

The CARES Act provides stimulus checks up to $1,200 to eligible US citizens to minimize the economic impact of the pandemic. Besides, stimulus checks will help to stimulate the economy by providing some money to common people for spending!

To be eligible to receive a stimulus check, you need to be a US citizen with a valid Social Security Number. Also, your eligibility depends on your adjusted gross income (AGI) as well! Let’s check!

Filing status AGI Stimulus check amount
Single or married but filing separately Below $75,000 $1,200
More than $75,000 but below $99,000 $1,200 – 5% of (your AGI – $75,000)
Married and filing jointly Below $150,000 $2,400 and $500 for each qualifying child
More than $150,000 but below $198,000 $2400- 5% of (your AGI – $150,000)
Head of household Below $112,500 $1,200
More than $112,500 but below $136,500 $1,200 – 5% of (your AGI – $112,500)

If you are eligible to receive a stimulus check, you might have received it already or might receive it within a short time! Because, according to the latest report by the House Ways and Means Committee, about 30 to 25 million payments are still left to be issued!

My suggestion would be, you should use your stimulus check very wisely! Don’t spend it randomly! You can use it to make necessary bill payments during coronavirus or you can stash it in your emergency fund too!

So, the bottom line is, you have to stop being worried about bill payments during coronavirus. Rather, you should look for various ways that can help you to pay bills during this COVID-19 pandemic! I hope the above options will certainly help you to do so!

Lastly, take care of yourself and save money as well for a better future ahead! Stay safe!

author Valentina Wilson profile pic

By bestdebtconsolidation_admin on December 27, 2020

Valentina Wilson is a writer and blogger who specializes in personal finance and positive change and associated with BestDebtConsolidation. She has a master’s degree in financial journalism and seven years of experience in personal banking and believes that small behavioral changes are the key to achieving financial freedom.

Follow her on Linkedin: valentinailson