The coronavirus has impacted our lives to a huge extent! To brace ourselves from this deadly virus, the lock-down was imposed. Almost everything stopped to spread the pandemic!
Eventually, many people lost their jobs. And the number of applicants for claiming unemployment benefits has been rising!
But amidst this pandemic, one thing has remained constant! Yes, you have guessed it right!
So, if you are reeling under debt, apart from thinking about the pandemic, you are likely to be worried about the soaring high-interest rates of your debts!
But relax, buddy! Today, we are gonna discuss how you can effectively deal with your debts during this COVID-19 pandemic!
Do you know about the CARES Act?
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It’s said that the CARES Act is the largest stimulus package in the history of our country.
Well, the CARES Act provides economic assistance to the people who are going through tough times due to the pandemic! One of the salient features of the CARES Act is helping people to make their debts more manageable!
● If you have taken out federally-backed student loans, you don’t have to make payments up to September 30, 2020. And guess what?
No interest will be accrued during this period!
In case you owe a private student loan, you can talk to your lender and explain your financial situation. Because many private student loan lenders like Sallie Mae, Discover, etc. are offering repayment assistance to their consumers who are going through financial hardship due to COVID-19!
● Under the CARES Act, if you have opted for a federally backed mortgage loan, you can request forbearance for up to 180 days! And in the future, if an extension is required, you can request for an additional 180 days.
But if you have taken out a private mortgage loan, contact your loan servicer asap. The financial regulators of our country have urged the private loan servicers to offer assistance to their consumers who are going through a financial crunch due to the pandemic!
Are you eligible to receive stimulus checks?
According to the CARES Act, you can get a stimulus check up to $1,200 if you meet certain criteria! Well, to be eligible for receiving stimulus checks, you need to:
● Be a US citizen with a valid Social Security Number (SSN)
● Have an adjusted gross income (AGI) below $75,000 to receive a $1,200 stimulus check, if you are single or filing separately. Otherwise, if your AGI is above $75,000 but below $99,000, then you will get a reduced amount check!
● Have an AGI below $112,500 to get a stimulus check of $1,200, if you are the head of the household!
● Have an AGI below $150,000 to receive a stimulus check of $2,400, if you are married and filing jointly. Otherwise, if your AGI is above $150,000 but less than $198,000, you will receive a reduced check.
So, are you eligible to receive a stimulus check? If yes, most likely, you have already received it or likely gonna receive it soon!
So, make sure you are using your stimulus check for a good cause. You can utilize it for making payments for your debts (for which you aren’t getting any assistance from lenders)!
What will you do if you have unsecured debt?
A CreditCards.com poll reveals that almost 59% of the credit cardholders in our country had debt when they entered this pandemic!
But the CARES Act has brought relief to the people who have secured loans and that too federally backed!
However, many credit card companies like Chase, Citi, Capital One, etc. are offering assistance like:
● Waiving off late fees or penalties
● Lowering interest rates
● Allowing to miss payments
So, if you have unsecured debts, talk to your creditors first and explain your financial hardship due to this pandemic! Hopefully, they will be able to provide you with some sort of repayment assistance!
Opt for a debt management plan (DMP)
Are you trapped with unsecured debts?
If yes, you can opt for a debt management plan and get rid of your debts!
Unsecured debts usually have high-interest rates as you don’t have to keep any collateral. One of the common examples of unsecured debts is credit cards.
As I said before, the CARES Act mainly provides repayment assistance to the federally backed secured debts! So, if you have taken out an unsecured loan, you might face hurdles to pay it off, especially during this pandemic!
Once you opt for a DMP, the debt management company will negotiate with your creditors to reduce the interest rates and waive off the penalties or late fees, if any!
And they will chalk out a repayment plan for about 3 to 5 years so that you can pay off your debt with ease!
However, make sure that you are consulting a reputed debt management company and preferably, accredited by the National Foundation for Credit Counseling (NFCC)!
So, I hope the above tips to deal with debt during coronavirus will help you to stop being worried and act accordingly! And the bottom line is that you have to take steps depending on the debts you owe!
If you have federally backed debts, then the CARES Act brings you some sort of relief!
In case you have taken out loans from private lenders, please don’t worry! Talk to your lenders and explain your financial condition to seek repayment assistance! Hopefully, everything will be sorted!