I can’t pay all of my bills, what do I do?

Experiencing a loss of income means less money and being faced with the difficult choice of deciding which bills you can afford to pay and which ones you cannot pay. Consider which bills will have the most drastic consequences if they go unpaid and try to make the best choice based on your personal situation. For instance, you may be more likely to prioritize paying your cell phone bill when it is your only form of communication instead of paying your bill for a streaming service such as Netflix or Hulu. The CFPB has put together useful Tools to help when you can’t pay your bills.

Debt payments such as a credit card bill, mortgage loan, vehicle loan or student loan can be more challenging to prioritize. Take inventory of all the accounts you owe on and begin to reach out as soon as you think you need help, companies require a consumer to formally request financial assistance before making any type of concessions. You have every right to ask for help at this time. Due to the high volume of client inquiries for help, it might be easier to contact the companies through their websites before getting through to them by phone.

The type of help available will depend on the debt and each institution has their own policies. However, concessions may include lowering or deferring your monthly minimum payment, waiving or refunding late fees, reducing your interest rate on the account, and establishing a payment plan to pay off existing balances. View this article from Forbes on which banks are offering relief to customers affected by COVID-19.

When you get in touch with the financial institution, have a pen and notepad ready to make note of the relief offers and always ask how long the relief period will last and when you will need to start repaying the full bill. Be honest about your situation and don’t commit to something if you know you cannot follow-through. Request a written copy of the agreement for your records.

• Credit Cards:  Once you contact the credit card company to let them know you’ve been financially impacted by the pandemic, they may offer you a relief package. The CFPB offers a guide on Credit card debt during coronavirus: Relief options and tips.
  
  
• Mortgage Loan:  Homeowners who have been financially impacted by the pandemic may qualify to have mortgage payments reduced or suspended for up to 12 months. Mortgage lenders are required to work with you to find a solution but you need to contact them immediately to make them aware of your situation. Read more about contacting your mortgage loan servicer here and read our article about housing in this help section.
  
  
• Vehicle Loans:  If you depend on your vehicle for work or for the care of a family member, a vehicle loan could be essential for you. Contact your loan servicer as soon as you think you might not be able to make a payment on your vehicle. It might be possible to push back the due date of the payment, or defer payments, often through a refinance. More information is here.
  
  
• Student Loans:  Contact your student loan servicer right away and ask what type of help they are offering borrowers affected by the pandemic. Federal student federal loans are serviced by the US Department of Education and are automatically being placed in an administrative forbearance. There is also useful information about the department's temporary relief programs, here. View additional guidance about federal student loans from the New York Times. Private student loans are managed by private companies and may offer different options but the most common option is deferment or forbearance.

Not making payments on debt obligations typically always affects your credit score but the good news is that credit can be rebuilt over time and by taking action. This CFPB article provides guidelines to help you protect your credit during this time. When you feel you are able to focus on rebuilding your credit, an excellent way to do so is by participating in a Lending Circle.

Let’s walk through it together and schedule an appointment to speak with one of our financial coaches about your situation.