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Q&A: What should I do if I can’t pay my bills?

A lot of people are struggling with unemployment or losses of income during shutdowns related to the COVID-19 pandemic. MVI staff members have compiled this list of tips and suggestions that may be helpful.

What do I do if I can’t make my home loan or rent payment?

If you have a mortgage and can’t make your payment, call your lender and ask if you have a Fannie or a Freddie loan. (They will understand what those terms mean.) If you have either loan type, you can request forbearance (temporarily suspending your payments) for up to 12 months for your primary residence, investment property or a vacation home.

This will help protect your credit score. (Just keep in mind that your real estate taxes and homeowners’ insurance premiums will still need to be paid.)

If you have another type of federally guaranteed loan (FHA, VA or USDA), call your lender and find out what options are available to you.

If you pay rent, reach out to your landlord or property management company and see if any kind of an arrangement can be made. It’s better to have conversations now about a solution, rather than have no communication until you’re behind.

Having a conversation now will better prepare everyone for what to expect next.

Remember to have a plan in place before you make any call: Are you able to make half the payment? How will you catch up in the future? (And if you’ve been a good tenant, it’s OK to remind them of your past performance.)

In any case, remember that wait times are going to be long, and you may be on the phone for a while. Stay sane and be patient. (It’s easy to get frustrated and angry. We’re all short on patience right now.)

I’m concerned about my student loan.

Federally guaranteed student loan payments are automatically being suspended and set at 0 percent interest from March 13, 2020, through Sep. 30, 2020. (Contact your loan servicing company to determine if your loan is eligible.)

During this period, the full amount of your payments will be applied to principal once all the interest that accrued prior to March 13 is paid. (This a great opportunity to really crush your loan balance, if you can!)

This benefit doesn’t apply to private student loans owned by banks, credit unions, schools or other entities. You should contact them and see if there are any options available to you. Ask them about forbearance.

If that isn’t available, you may want to ask if they will adjust your payment schedule to income-based repayments. And then, check in again with them after six to eight months to see how you’re doing financially.

I am really struggling. I don’t think I can pay anyone right now.

If you are faced with currently not being able to make any payments, let’s try to minimize the damage to your credit score.

Most damage: Paying your mortgage late will cause the most damage.

Medium damage: Missing payments on installment loans such as auto and student loans, or paying them late, will cause medium damage to your credit score.

Least damage: Late or missed credit-card payments have the least impact. But be aware of any late fees or penalties your card providers may charge.

Skipping any payment is going to have a negative effect on your credit score, which is why communication is so important.

If you are wondering about long-term damage, remember, this pandemic is a worldwide event. You are not alone. It will be explainable when you’re applying for a home loan or car loan in the future. (Most likely there will be accommodations made for people who are borrowing money in the future and who were affected by coronavirus/COVID-19 closures.)

Now what?

This will all be over some day. Let’s work together to create a financial plan for you and prepare a better safety net for when things are back to normal.

Most of us are one paycheck away from financial disaster. One goal to work towards is having at least six months’ worth of savings to pay your expenses. That may seem impossible, but it’s closer than you think.

We can work with you to help you build small deposits each month to establish an emergency fund. Our financial coaches are available now — and after the COVID-19 pandemic — to provide one-on-one help and advice.

If you make smart financial decisions now, during this emergency, you have a better chance of a more secure financial future later. Call us. Let’s walk that path together.

If you would like to speak to one of our financial coaches, call 412-464-4000, ext. 4000, or 724-565-8040, ext. 2. You can also text “financial coaching” to 412-545-3181 or email dmattie@monvalleyinitiative.com.

If you would like to speak to our housing counselor, call 412-464-4000, ext. 4008; text “housing counseling” to 412-545-3181, or email jweaver@monvalleyinitiative.com.

Mon Valley Initiative