COVID + Credit: Where to Get Help
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As the severity of the Covid pandemic continues to mount across the US, widespread efforts to contain its spread have left many Americans out of work and worried for the future. Indeed, some 3.3 million Americans filed for unemployment the week ending March 27th.
Jerome Powell, Chair of the Federal Reserve, acknowledged that the US may already be in a recession and many economists now believe the unemployment rate in the US will quickly climb due to the social distancing protocols and resulting economic impacts.
Times are tough. We understand that you may be facing some unexpected and difficult financial obstacles right now, such as a depleted savings account or damaged credit. While some of the damage may be unavoidable, there is help (federal, state, and private). This page contains answers to questions we're getting asked right now.
Q. What if I'm afraid of getting sick and don't know if I can afford healthcare costs?
One of the major sources of anxiety during the Covid pandemic is your health and that of your loved ones. First, know the symptoms of the virus - commonly a fever, tiredness bordering on exhaustion, a sudden loss of smell or taste and a dry cough. In severe cases, you may have shortness of breath or difficulty breathing.
It's important to understand what's covered by your health insurance (if you have it) and what isn't. The federal government recently passed a law requiring health insurers to cover testing costs for Covid-19, but importantly, the legislation does not require insurers to cover the cost of treatment. Additionally, though the cost of testing is covered, many states and counties have limited resources to conduct tests and are reserving them for the most seriously ill and vulnerable patients.
It's difficult to estimate how much you might owe for Covid-19 treatment if you were to test positive and were admitted to a hospital, but a rough estimate in The New York Times found that the total cost could be over $20,000 - with an individual's out-of-pocket costs running around $1,300. Importantly, the total cost to you depends on what health insurance you have, where you get care and the severity and length of your illness.
For more information on when you should seek professional help versus when you should simply self-isolate in your home, visit the Center for Disease Control's website.
Q. What if my partner or I lost our jobs?
If you or your partner have lost your job as a result of the Covid pandemic, you're not alone. The US Private Sector Job Quality Index has forecasted that the layoffs and furloughs related to the Covid pandemic will continue to grow. Fortunately, in response to this sudden influx of unemployed workers many states have temporarily expanded access to unemployment for those out of work because of the virus.
If you can't work because of the following circumstances related to the pandemic, it's likely that you will be eligible for unemployment in your state:
- If you are sick or have been exposed to Covid-19
- If you must care for someone in your immediate family who is sick with Covid-19
- If you cannot reach your place of work because of a quarantine
- If you are an at-risk individual who needs to self-quarantine to protect yourself from Covid-19
If you have been kept from work because of the following circumstances, it's possible that you will be eligible for unemployment, however access will vary by state and individual circumstance:
- If you are unable to work because you must care for a child because of a school closure
- If you are working significantly reduced hours due to Covid-19
To get more information on what to know about unemployment and the Covid pandemic, check with your state's Department of Labor. You can find additional information on the US Department of Labor's website.
Q. What if I can't afford to pay my rent or mortgage?
If you suddenly find yourself without a steady source of income, you're likely worried about how to keep up with your mortgage or rent.
Federal officials announced a nationwide halt to foreclosures and evictions in March, a move which should protect more than 30 million American homeowners from losing their homes while the Covid pandemic shuts down much of the country. People who have suffered a loss of income can qualify to make reduced or suspended payments for up to 12 months, with details depending on their particular situation.
Fannie Mae and Freddie Mac, which underpin the vast majority of loans in the US are offering help for borrowers whose mortgages they hold. Go to FannieMae.com or Freddie Mac.com to figure out where you should apply for assistance. You will need to follow the instructions directly on those websites to get relief, and the process is being updated frequently.
To be clear, homeowners cannot simply stop making mortgage payments - you'll need to contact your lender to work out a payment plan. Your loan servicer will determine whether you qualify for assistance and how you'll repay missed payments. Importantly, this plan will not forgive debt or provide you with condition-free cash, but will instead allow you to find an agreement that lets you work things out when you recover financially. This might include extending the term of your loan or just paying the loan's interest for an agreed-upon duration.
If you are a homeowner, you can find more information about this program and related Covid pandemic actions on the US Department of Housing and Urban Development's website.
Unfortunately, federal plans don't cover more than 40 million renters in the US. While any federal action would provide welcome relief for renters, many critics worry that a plan similar to postponed mortgage repayment, where delayed rent payments would be repaid in full on the backend, could be unaffordable for many people in low-wage jobs without robust savings.
On a positive note, many municipalities and advocacy groups have already taken action to help renters. The Los Angeles City Council recently passed an emergency plan to temporarily halt evictions and create a citywide rental assistance fund, and Oregon's governor issued an order to stop residential evictions during the crisis. Check with local tenant advocacy groups to see if similar legislation has been enacted in your state, county or city.
Q. What if I can't pay my utility bills?
In addition to shelter, functioning utilities such as electricity and running water are crucial for riding out the Covid pandemic in your home. So it's understandable if you are increasingly worried about what might happen if you can't afford to pay your monthly utility bills.
First, reach out to your utility provider and see if you can work out a repayment plan that fits with your financial situation. You never know what type of arrangement you might be able to work out until you pick up the phone. If for some reason you can't reach an agreement, fortunately, many states and cities have barred providers from shutting off access to utilities because of late payment due to the Covid pandemic.
Additionally, many companies have also already committed to giving their customers a break during these times. Comcast has announced it is not disconnecting internet service or charging late fees for customers who say they can't pay their bills. Pacific Gas and Electric Co. has halted service disconnections for both residential and commercial customers for non-payment until further notice.
What if I can't pay my student loans?
Fortunately, if you have outstanding student loan debt from the government and are worried about paying it off, you have options, as the federal government has already taken steps to ease the burden of student debt on Americans.
In March, the Trump administration announced that Federal Student Loan Interest rates will be reduced to 0% for a period of 60 days beginning March 13, 2020. The federal government also recently announced that individuals may opt to suspend their student loan payments for a period of 60 days, though you need to contact your loan servicer and request forbearance to do so. Find out more at https://studentaid.gov/announcements-events/coronavirus
You should take your personal situation into account before deciding whether to take advantage of the forbearance process. If you are employed and financially comfortable in the short term, understand that any payment over the next 60 days will be applied directly to your loan's principle, which may allow you to pay off your loan more quickly. Those in the Public Service Loan Forgiveness program, who must make 120 payments before their loan is forgiven, may also want to continue to make payments.
Unfortunately, if you have private student loans, this legislation does not apply and you may have to continue paying principle and interest, though check with your loan servicer if you are in need.
The Covid pandemic is undoubtedly a trying time for every American, but you can prepare yourself but staying calm and knowing what to do in the case of a financial emergency. We'll keep updating this article as new information becomes available.