A new report from TransUnion, the consumer credit reporting agency, underscores the enormous challenges facing American consumers as the pandemic continues. Many are looking for financial relief during COVID-19.
In July when the survey was taken, 77% of respondents were concerned about being able to pay future bills and loans and forecasted an average budget shortfall of about $875. Nearly one-third of renters said they wouldn’t be able to cover the cost of their rent. Renters, who were more likely to have lost a job, also were more worried about their ability to pay for utilities, internet, and cell phone bills than homeowners.
It’s not all bad news. Some 11% of respondents had started a new job, and another 19% were receiving unemployment benefits. At the same time, fewer accounts for auto loans, credit cards, mortgages and personal loans were in “financial hardship,” which happens when people can’t keep up with their debt payments because of a situation beyond their control.
But, as the unemployment rate remains high and the health crisis leaves ongoing uncertainty, many Americans will face worries as bills come due. If you’re having trouble covering your bills each month, there are programs to help you.
Government programs provide protections for some renters and homeowners during the pandemic.
On Sept. 4, the Centers for Disease Control and Prevention issued an order to halt some evictions for nonpayment of rent through Dec. 31. Renters must meet certain eligibility requirements. They can’t earn more than $99,000 in annual income, must make their best effort to make partial payments and be able to demonstrate that they’d be homeless without the help, for example.
Homeowners with a mortgage may qualify for relief offered through the CARES Act, which passed in March 2020. The federal law puts some protections in place for homeowners who are experiencing COVID-related hardships and have mortgages that are federally or Government Sponsored Enterprise backed or funded. Those include FHA, VA, USDA, Fannie Mae and Freddie Mac loans. The Consumer Financial Protection Bureau offers more information about how to determine if you are eligible for the help.
If your mortgage isn’t federally backed or funded, the consumer protection agency recommends contacting your loan servicer to find out what options are available. Financial regulators have encouraged banks and other lending institutions to work with borrowers who can’t afford their bills because of COVID, according to the consumer protection agency. Some states, such as New Jersey, Alabama and Oregon, also are offering relief for homeowners.
For many Americans, credit cards provide a lifeline, making it possible to pay off bills and get a few groceries when cash is tight. But it’s also easy to rack up credit card debt. The average household credit card debt is about $8,000, according to a WalletHub report.
Credit card companies are offering some assistance for those in a financial crisis. Companies may be willing to lower or defer your monthly minimum payment, waive late fees, reduce your interest rate and put together a new payment plan.
The consumer protection agency recommends that if you need help, it’s critical that you contact your credit card company to let them know you’ve been impacted by the pandemic. Then, you can ask them questions about what relief packages they offer. If you decide to move forward, the agency says, always get the agreement in writing, so there’s no confusion about what you’ve agreed to.
You won’t run into as many relief programs if you’re having trouble paying off your auto loan because of the pandemic. Some lenders may be willing to work out new payment plans, but the consumer protection agency recommends that you get it in writing and understand the negative impacts that the new plan might have on your credit report.
The sooner you contact the lender, according to the agency, the more likely they’ll be willing to work out an alternative payment plan so you can keep your vehicle. The Federal Trade Commission has some tips for talking to your lender to prevent a vehicle repossession.
These are tough times. If you’re worried about paying your bills, find out if you qualify for relief through these programs or check in with one of our credit counselors to investigate other options to find financial relief during COVID-19.
Consumer Education Services, Inc. empowers people to overcome their financial challenges and lead financially-healthy lives.
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