In the last blog, we discussed mortgage and rental assistance to protect homeowners and renters during the current pandemic. Other debts and obligations that must be addressed are automobile loans, credit card debt, and student loans. Many people have at least two or more of these debts, and may experience accumulating interest rates, threats of collection, or repossession due to these debts, in addition to constant or harassing phone calls from creditors.
Credit card debt is common among individuals, and many people have several credit cards, including some with high interest rates. Credit card companies may have relief for debt holders. Check the website of the credit card company for any relief assistance, or call the company directly. Some credit card companies are waiving late fees. Another option is to either delay payments for a certain time or adjust payments to an affordable amount. Credit counseling agencies are mostly non-profit organizations that can advise on how to manage debt, and some may negotiate terms with creditors. Make sure the credit counseling agency or any debt management agency is accredited because of the increase in fraudulent companies. Be wary if a company asks for an upfront fee before performing any services. Check the Better Business Bureau, opens a new window or research customer reviews on any company before committing to services.
Automobile loans are another type of debt that may require relief assistance, and the best way to get help is to contact your lender. You can find out more about assistance from a specific lender by reviewing the company's website, applying online (if the option is offered), or contacting the lender directly. Many automobile loan lenders, like banks and other financial institutions, are offering deferred payments and waiving late fees. Asking for assistance can potentially stop any repossession efforts. When applying for a hardship or loan assistance program, here are some questions to ask the lender:
- Do you have any hardship programs for people with financial loss due to the Coronavirus?
- Will I owe more on my loan overall? Will there be any additional interests or payments at the end of the loan or during the loan?
- Will this affect my credit limit?
- Will this have an effect on my credit report?
- If I am still having problems paying at the end of the hardship program, what are my options? Can I have an extension?
Student loans are handled differently, especially if the loan servicer is a Federal government loan provider. Under the CARES Act, student loans that qualify have a forbearance period until September 30, 2020. This is an automatic forbearance for most loans. During the forbearance period, payments are automatically deferred and interest rates do not accrue. Also, there is zero interest rate during forbearance. If student loans are from a private loan servicer, and you're having difficulty paying the loan, then reach out to the loan servicer for assistance.
No matter the type of debt, the main point is to contact the loan servicer or financial institution early and explain any financial circumstances that are preventing you from paying the debt(s) in a timely manner. Take advantage of relief programs if necessary and keep track of documents, paperwork, and credit reports to ensure your financial stability.