As the nation prepares to begin its second month of compulsory lockdown, individuals and families across the US are struggling to adapt to harsh, new financial realities. Millions of Americans who were earning a steady income just two months ago have suddenly lost their jobs as a result of the public health policies and economic pressures precipitated by the virus.
Debt has become a particularly charged topic of discussion in recent weeks. Unfortunately, it’s the norm in the United States. And it isn’t just trivial amounts of debt, either. According to a 2019 study from Experian, the average personal debt amount in the US is $90,460. It’s little wonder, therefore, that debt has become such a major cause of stress in most households across the US. Without a monthly paycheck, how can Americans expect to continue to pay off their student loans, mortgages, and credit card debt?
Thankfully, the scale of the crisis has prompted many lenders - both federal and private - to introduce financial assistance programs to debtors. If you’ve been financially impacted by the pandemic and you’re concerned about making your monthly debt payments, there’s a good chance that you’ll be eligible for one or more of these programs.
Here are answers to some of your most pressing questions about debt payments during the pandemic:
- Do I still need to submit student loan payments? In March, President Trump “waived interest on all student loans held by federal government agencies...until further notice.” Shortly after, the waiver was confirmed in a statement from the US Department of Education. The Department has mandated that all federal student loan servicers allow at least 60 days of respite to any debtors who request it. Most major student loan servicers - including Navient, FedLoan, and Nelnet - have posted their COVID-19-related policies on their landing pages. If you’d like to apply for a 60-day grace period, reach out directly to your lender. Keep in mind that these servicers are receiving a lot of requests right now, so you should be prepared to wait on hold for a bit.
- Will I still be required to submit my monthly mortgage payments? In March, the Department of Housing and Urban Development suspended all foreclosures and evictions until the end of April. At around the same time, mortgage servicers began to introduce forbearance options (i.e, temporary suspensions to mandatory loan payments) for debtors. These programs vary between servicers, however, which means that if you have a mortgage, you should contact your lender as quickly as possible to learn more about the financial assistance programs that might be available to you.
If you’re a renter, the situation is a bit more uncertain. No two landlords have the exact same financial situation, which means rent payments will need to be negotiated on a case-by-case basis. Before you stop paying your rent, you should be sure to have a discussion with your landlord about any options that might be available to you.
- What about my credit card debt payments? Major credit card issuers have also begun to offer financial relief options during the coronavirus pandemic, including waivers for interest and late payment fees. In most cases, however, you won’t be eligible to receive assistance unless you apply for it. To find out what assistance programs are available to you during the COVID-19 pandemic, contact your credit card issuer as soon as possible.
The Bottom Line
No one can say for certain at this point what the long-term implications of the coronavirus pandemic are going to be. What does seem certain is that the economy will remain in a deep freeze as long as the majority of the population remains in lockdown. As the crisis unfolds, federal and private lenders will continue to adjust their financial assistance policies accordingly. To stay on top of your debt payments, be sure to routinely check in with your lenders and take advantage of all of the assistance programs that are available to you.
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