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What to do if you can’t pay your bills:

If you are struggling to make your monthly obligations, we recommend you go to the Compass Catholic Facebook page and watch the Live Event entitled “Creating a Crisis Budget.”

During a period of income instability, it’s important to determine what is a want and what is a need.

Your needs come first. Are your essentials covered? Your crisis budget helps you determine what those essentials are. You need to keep a roof over your head, your utilities on, access to transportation, and a reasonable amount of food on the table. We also recommend you keep your insurances (like auto and medical) current.

Second priority is your loan payments:  credit cards, personal loans, auto loans, etc.

Third priority If you have additional funds, is your future needs, such as a property tax bill you have to pay in six months.

And If there is any money left, consider adding to your emergency fund.

If you can’t cover your needs, even after slashing non-essential spending, it’s a good rule of thumb to keep in contact with your lenders/service providers. So many people are in the same boat and lenders/creditors generally work better with people who have kept in contact.

The following information was pulled from multiple sources, including a few US government agencies. If you are not located in the US, research what your government is advising as a recommended course of action.

If you own your house and have a mortgage or a HELOC on your property, check with your lender to see what they are offering in regards to assistance. Some are offering payment deferrals with no late fees up to 120 days. This is generally not automatic so contact your lender if you anticipate not being able to make your April payment. Check online to see what your lender is offering by going to ABA.com (if your lender is a bank) or Americascreditunions.org (if your lender is a credit union) to see what your lender is doing to help their customers.

A new federal law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, put in place two protections for homeowners with federally backed mortgages. First is a foreclosure moratorium, and the second is a right to forbearance for homeowners who are experiencing a financial hardship due to the COVID-19 emergency.

Please keep in mind, the mortgage servicers are experiencing tons of phone calls right now so if you aren’t facing an immediate financial issue and can afford to pay your mortgage, please do. If you were to open up your Bible and turn to Romans 13:7, you would read, “Pay to all their dues, taxes to whom taxes are due, toll to whom toll is due, respect to all whom respect is due, honor to whom honor is due.” So, if you have the ability to pay it, we recommend you do.

If you have a mortgage on an income property that is occupied by a tenant and you know that your tenant may be running into financial difficulties, check with your lender as well. Fannie May and Freddie Mac both have programs where they offer loan deferrals with the agreement that the landlord won’t evict their tenants. It’s sort of a “if you give your tenant a break, we’ll give you a break” program. Remember that deferral does not equal forgiveness. You still owe the money, but it’s just deferred while we all get through this time. 

If you are renting and anticipate having trouble paying rent, you should call your landlord to explore your options. Often when people can’t pay they retreat and fail to communicate. That’s sure to make things worse when the current eviction freezes are lifted. Keep in mind that even if your landlord is able to get a forbearance for their mortgage, you’ll likely have to catch up on the missed rent payments later.

Also, check with your local 211 or 311 resources for possible rent assistance.

Go to your local utility companies’ websites. They may already be offering assistance that you’re unaware of. For assistance with heating and cooling expenses, the Low Income Home Energy Assistance Program (LIHEAP) helps provide low-income families with their heating and cooling energy costs.

For families requiring temporary assistance with food during the outbreak, the Temporary Assistance for Needy Families program can help provide financial assistance and related support.

The Supplemental Nutrition Assistance Program (SNAP) serves millions of people annually, ensuring that they and their families have access to nutritious food options. The SNAP for Women, Infants, and Children (WIC) provides for the special dietary needs of nursing and pregnant women, infants, and children under the age of five.

If you are having trouble paying your auto loan payments your lender may have options that will help. They may offer to let you change the date of your payment, request a payment plan, ask for a payment extension, or move the payment due to the end of the life of the loan.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides automatic suspension of principal and interest payments on federally held student loans through September 30, 2020. These suspended payments will count towards any student loan forgiveness program. This information is current as of March 28th from the Consumer Financial Protection Bureau’s website. Go to Studentaid.gov to ensure this information is current.

If you have a federal student loan, you do not need to apply to suspend your federal student loan payments, nor do you need to contact your student loan servicer. Your federal student loan servicer will suspend all payments without any action from you.

The suspension of payments applies only to student loans that are held by the federal government. Some federal student loans under the Federal Family Education Loan (FFEL) Program loans are owned by commercial lenders, and some Perkins Loans are held by the institution you attended. Payment on private loans is not automatically suspended. These loans are not eligible for this benefit at this time. This benefit also does not apply to private (non-federal) student loans owned by banks, credit unions, schools, or other private entities.

If your federal loan is held by a commercial lender, you may want to investigate income-driven repayment plans  if you are not already enrolled. Again, go to studentaid.gov to see what you can qualify for.

If you have private student loans, contact your servicer to find out what options are available to you. Some private lenders offer their own reduced payment options. Many servicers offer ways to postpone your payments, such as forbearance.

Try your best to at least keep up with the minimum payments. If that isn’t feasible at this time, call you lenders before your due date and explain your situation. They may have payment options for you to consider. They may also be able to either lower your interest rate or pause your payments for a period of time.

Communicate, communicate, communicate. You won’t know what your lenders or service providers are willing and able to offer until you talk to them.  Be sure to keep a diary of who you talked to , what they said and what the next steps are.

It is important to create and follow your crisis budget. Most times the assistance these companies can offer will focus on extending your due date. You will still owe the money eventually. If your service providers/lenders give you a bit of breathing room, it’s your responsibility to put together a financial action plan.

Keep a generous heart. It’s not the amount that you have to give, but the willingness in your heart to give it. And even if you have very little monetary treasure to be generous with these days, you can still be generous with both your time and your talent. Generosity has been shown to lower blood pressure, reduce stress, and it actively combats feelings of isolation. At times like this, find a way to be generous!

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