How to Alleviate Debt from the COVID-19 Pandemic

by | Nov 22, 2020 | Finance

Rashad Blossom

The COVID-19 Pandemic plunged millions of Americans into financial chaos. The sudden decrease in income has made it difficult – and for some impossible – to pay expenses. Here are some tips for alleviating your debt during the COVID-19 crisis.

  1. Contact Your Creditors. In response to the COVID-19 pandemic, most credit card companies and mortgage lenders offer assistance to customers. Some utility companies are offering help as well. Contact your creditors and ask if they have a COVID-19 assistance plan.

 

  1. Get Unemployment. President Trump signed The CARES Act on March 27, 2020. CARES gives states the option to extend unemployment benefits to workers who are usually ineligible – such as independent contractors. Your state’s unemployment insurance office can tell you if these benefits are available in your state.

 

  1. Speak with Your Landlord. Federal and local governments are making an effort to halt some evictions up until December 31, 2020. An order called “Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19” went into effect on September 4, 2020. 

The order has strict rules about which tenants are covered. Tenants ineligible for the order may possibly have state eviction protection. If any eviction protection doesn’t cover you, speak with your landlord as soon as possible to discuss your situation.

  1. Contact Your Car Loan Lender. Some car loan lenders are allowing borrowers to defer loan payments. For example, Ford Motor Credit is offering payment extensions and waiving late fees upon request. And Wells Fargo Bank is waiving late fees and offering payment deferments for three-months. Contact your lender and see if they’re assisting borrowers affected by the pandemic.

 

  1. Request Student Loan Forbearance or Deferment. A student loan deferment allows you to stop paying the principal or interest on your loan temporarily. Submit a request for deferment to your loan provider. For a Federal Perkins Loan, submit your request to the financial aid office at your school.

If you don’t qualify for a deferment, request student loan forbearance. Forbearance temporarily reduces your monthly payment for up to a year or gives you the option to stop paying on the principal temporarily. If forbearance or deferment aren’t best for your situation, consider an income-driven repayment plan if you’re working.