The COVID-19 pandemic and related economic crisis have hit many individuals and families hard, whether it’s health care costs, job losses, or a decrease in income.
If you have made cuts to your budget and are still struggling to make ends meet financially, it may be time to ask for help.
Explain your situation
Lenders and creditors are often willing to work with people experiencing a crisis, whether it’s a job loss, unexpected medical bills, or the loss of a loved one. If you’re having trouble keeping up with payments, be proactive by contacting your creditors. Explain your situation and ask what your options are.
Debt payment relief
You may be able to skip a payment, move a due date, or be considered for an alternate payment plan. Be firm about what you can do and what you can’t. If you have student loans, consider applying for a deferment, forbearance, or income-driven repayment plan.
If you’re experiencing a crisis due to COVID-19, you may be eligible for housing assistance. Visit the Consumer Financial Protection Bureau website to learn more about mortgage relief.
Depending on your income, you may be eligible for additional assistance. The Supplemental Nutrition Assistance Program (SNAP) offers help with grocery purchases. There may also be local programs in your area. A good starting point is calling 211 or visiting https://www.211.org/, a United Way service that connects you with local assistance programs.
While some solutions may provide short-term relief, they may have long-term consequences. Make financial decisions that will serve you even after the crisis is over by avoiding these short-term solutions.
- Avoid payday loans: It’s tempting to reach for anything that looks like a lifeline in a crisis. For example, payday loans are quick and easy to get. The downside is that you pay a significant amount in interest. With some payday lenders, you can end up paying almost as much in interest as you borrowed.
- Consider personal loans: A better alternative could be a personal loan. These loans typically have longer terms, so you have more time to pay them off. Some have high interest rates, though, so review the fine print carefully and work with a reputable organization. Your bank or credit union is a good place to start.
- Be wary of debt relief: You may also see debt relief or credit repair advertisements. While some are legitimate, many charge hefty fees and don’t offer anything that you couldn’t do yourself.
- Explore credit counseling: If you’re feeling overwhelmed by debt and the crisis you’re facing, consider working with a legitimate credit counseling agency. These counselors can help you develop a budget and organize a plan for managing your debt. You can find assistance at https://fcaa.org/ or https://www.nfcc.org. If you're new to the process and want to ensure you're exploring your options safely, you can verify the legitimacy of a credit counseling agency.