Debt and the Pandemic: Know Your Options

Economists’ projections vary, but one thing is certain: as millions are laid off, debt will become a major problem for American households. Know your options when it comes to debt relief. 

The US government is borrowing trillions of dollars to deal with the economic consequences of the coronavirus outbreak. The American people do not have this luxury. If your financial situation has changed as a result of the pandemic, you’re not alone. The economic fallout from the disease is leading to projections of unprecedented unemployment levels this month. Luckily, many programs exist at the state and federal level to soften the blow to your finances. Know your options so that when the dust clears, you can pick up where you left off.

Credit Card Relief

Credit card providers are offering clients temporary relief from monthly payments as well as debt consolidation options. You can review a list of credit card providers’ policies at Experian’s page.

Student Loan Debt

All federally backed student loan debt is automatically in forbearance until September 30, 2020. Non-federal student loan providers are likely to offer similar assurances. Additionally, you can contact your provider’s website directly to review your options.

Mortgages and Rent

The CARES Act may suspend your payments for now but it doesn’t mean that your loans are forgiven! Take advantage of this time and enroll in the Income-Driven Repayment Program to count these months into your loan forgiveness! pic.twitter.com/IqntlEzQao

— Alumni Support Center (@infoalumnisc) April 30, 2020

The CARES Act directs banks holding federally insured mortgages (about 70% of US mortgages) to suspend payments for up to twelve months under certain circumstances. If you’ve lost your job, or suffered any lost income as a result of the outbreak, you’re eligible for this mortgage relief. No late fees will be assessed during this time, and many families are also eligible for forbearance, which means no interest can be accrued during the forbearance period.

More information on your mortgage options here.

During the pandemic, the US government wants to protect you from eviction for financial reasons. Many of the same protections for mortgage holders are also available for renters. Any federally backed mortgage is eligible for a temporary moratorium on evictions. The US is also investing billions of dollars in direct rent assistance, and states are stepping up to assist renters during this difficult time as well.  Similar to mortgages, rent relief programs also vary by state.

Consult your state’s policy here.

Small Businesses

The US government has invested heavily in preventing small businesses from laying off employees and defaulting on their loans. The US Small Business Administration has rolled out a comprehensive debt relief program in order for businesses to be able to pay their employees and avoid bankruptcy during this trying time for US enterprise.

The SBA’s Paycheck Protection Program will grant forgivable loans to small businesses if used to keep employees on the payroll for 8 weeks.

The SBA will pay 6 months of principal and interest payments for all 7(a), 504, and Microloans disbursed prior to September of 2020. Additionally, it will defer payments on all SBA Disaster Loans

More Information on SBA coronavirus debt relief here.

Don’t Lose Hope. Act.

If you’re worried about any kind of debt payment, professional or personal, you likely have options to stay above water during the pandemic, or even have payments made by the government. Know your rights and the programs available to you. Also, be sure reach out to your credit provider as soon as possible to find out the best path forward.

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