Dealing with debt and mounting bills can be difficult, especially when combined with the added stress of the coronavirus pandemic. Whether you’re facing a reduction in income or complete job loss, it can quickly become overwhelming trying to figure out what you can afford and how to prioritize your money. While it can be tempting during this “survival mode” to avoid contacting your creditors, here are a few reasons why it’s in your best interest to reach out to your lender, utility company, landlord, etc. before those bills potentially become past due.
- It can help you learn about out what kind relief may be available
From government assistance to corporate relief programs, there are a variety of supports available that you may not know about. Many phone, internet, and utility providers are waiving late fees and postponing shutoffs for unpaid bills. Credit card and insurance companies are also allowing customers to defer payments and waive certain account fees. The catch? Almost all these programs require you to contact your provider before your bill is due. Some places may require a phone call, while for others all you need to do is log into your account online or through your mobile app.
- They may be willing to negotiate
Some borrowers have found success in renegotiating their loan terms with creditors in light of the current economic crisis. Many homeowners whose mortgages are backed by the federal government, for example, are eligible for flexible payment options if their income has been affected by COVID-19. Once again, for these qualifying buyers, they can’t simply miss payments without contacting their loan servicers. But once they do, the door is opened to options like negotiating lower payment amounts or pausing payments for up to 12 months. Other industries and individual companies offer similar opportunities, but oftentimes consumers won’t find out until they contact their provider before that missed payment hits their account.
- It can help you protect your credit
No one knows where this pandemic will lead concerning long term financial impacts. While savings and cash reserves are critical right now, maintaining your credit score could become vital in the future. Speaking with your creditors can mean the difference between an unexcused missed payment (which hurts your credit score) and a deferred payment (which does not hurt your credit score). Even if you can’t pay your bill when it’s due, it’s still a good idea to see if your creditor has any payment or deferment plans that won’t negatively impact your credit score.
- It will help with getting a handle on your emergency budget
During these times, giving a specific job to every dollar you have is especially important. Paying high priority bills first, taking stock of which organizations are providing temporary relief, and finding ways to cover essential family expenses are all part of managing a financial crisis. Knowing which companies offer payment flexibility can be invaluable when trying to stretch your dollar as far as possible, whether you’re struggling to pay bills or trying to save for a potential layoff or furlough (just be sure to read the fine print for each payment plan offered).
It can sometimes feel embarrassing to be open with your creditors, landlord, or other providers about not being able to afford your bills. It’s important to remember that you’re not alone, and that thousands of people in the St. Louis region are also going through the same situation at this time. You are not defined by your balance sheet, and all week we’ll talk about steps you can take to weather the storm in a way that makes it easier to rebuild once this moment has passed. As always, if you want one-on-one support, you can contact us to set up a free coaching session today.
Nay’Chelle Harris, Financial Coach