May 4, 2020
The recent corona virus has caused the economy to stand still and there are many owners who of properties who are laid off and have problems with money for their daily lives. These including paying for groceries as well as paying for bigger items such as mortgage loans. Many of these owners decide to turn away from reality and shut themselves out of the world to prevent them from thinking about the problems. It’s terrifying to suddenly find out that you’ll not be receiving another paycheck. It’s easy to go into panic mode, especially if you have others depending on you to keep the lights on and stomachs full.
Across the country, utility companies are responding to the government shutdown by promising not to turn off their services when bills are overdue. Unemployment insurance checks can then go toward more important items, such as food.
Once the initial shock wears off, there are things you can do to mitigate your situation and, hopefully, save your credit score.
If you can’t make your house payment and haven’t yet contacted your lender, put this one at the top of the list of things to do.
Many lenders have online options to fill out the required paperwork for requesting forbearance, making it a lot easier than sitting on hold for lengthy periods of time if you call.
Some lenders are offering forbearance only, and the details vary, depending on lender. Forbearance allows the borrower to miss payments, often penalty-free, and make them up at a later date.
While this option offers immediate relief from one of our biggest payments each month, many borrowers don’t understand that forbearance isn’t forgiveness. The missed payments will need to be paid and many lenders will be demanding a lump sum.
Few Americans are able to come up with thousands of dollars in a lump sum after several months of unemployment.
First, the CARES Act “… provides several levels of relief to home-loan borrowers, including the right to request two periods of mortgage-payment forbearance or suspensions totaling up to 360 days,” according to Russ Wiles with the Arizona Republic.
The National Association of REALTORS released an analysis of the act and says that while “… regular interest can still accrue,” additional fees, such as penalties and interest, won’t “… be assessed for the forbearance.”
We mentioned earlier that many utility companies have agreed to keep their services running, despite non-payment.
Typically, this doesn’t mean they won’t be tacking on late fees and it doesn’t mean you won’t be faced with a huge bill at the end of the crisis.
It’s challenging right now to avoid the former, but the latter can be handled by whittling away at your bills. Pay what you can, even if it’s just a small amount.
Once we’re back to business-as-usual, folks will be facing huge bills and those disconnect notices will go out. You’ll be glad you paid at least part of what you owe.
In the meantime, order your credit reports from the big three reporting agencies. Normally, every American is entitled to one free credit report every 12 months from .
While there isn’t much we can do to prevent negative entries right now, we can protect our scores by combing through each report to ensure accuracy.
Don’t hide from your financial problems. Be proactive, keep track of where what little income you have right now is going. Communicate with lenders and others and keep an eye on your credit score.