It is the first full week of April, which means rent checks are due and bills are coming up for millions of Americans hammered by the novel coronavirus outbreak.
But financial experts and consumer advocates say people have options to survive the storm. Those include government assistance, regulatory protections and programs by private lenders.
Scott McLeod, president of Brown Financial Advisory in Fairhope, told FOX10 News that the first thing people should do is take an inventory of their finances.
“Write down the debts that are due and when they are due,” he said. “Write down any savings. Do a little network statement so that they kind of have a timeline as to when those payments might be coming due, and then that way, they have an idea how much time they have before they can kind of mitigate the damage, if you will.”
After that, McLeod said, it is important that people who have lost jobs because of the pandemic file for unemployment benefits if they have not already.
“I would hope that most people would know to do that,” he said.
It has been hard for people to reach workers at the Alabama Department of Labor, but the federal law passed last month by Congress includes an additional $600 a week and makes a number of people eligible whno ordinarily could not collect unemployment.
Even if people get unemployment, though, it can take up to three weeks for the state to process the claims. McLeod said people should contact credit card companies and other vendors if they know they will have trouble paying their debts. He said the policies vary from company to company, so people should try to work out extensions and delayed payments.
“It’s worth a phone call if you’re in that situation,” he said. “It might get you some breathing room.”
One thing Alabamians will not have to worry about for the time being – losing their homes. Gov. Kay Ivey last week ordered a temporary halt to evictions and foreclosures.
The Mobile County Sheriff’s Office said Tuesday that it had 23 pending eviction notices when the government issued her order. Spokeswoman Lori Myles told FOX10 News that the department handles about 60 eviction notices in a typical month, although she added that half or more of the people leave before deputies have to remove them.
Congress also has taken steps. The Coronavirus Aid, Relief, and Economic Security (CARES) Act prohibits foreclosures on federally backed mortgages. Congress also has waived the early withdrawal penalty for 401(k) plans.
But some consumer advocates contend lawmakers did not go far enough. For instance, Congress rejected calls to prohibit any negative scores on borrowers’ credit reports during the crisis.
Still, a number of companies have indicated they will help people caught in a coronavirus crucible. For instance:
- American Express has said it will let customers skip payments without accruing interest and will offer lower interest rates on a case-by-case basis.
- Wells Fargo has said it will allow deferred payments and fee waivers for customers who contact the company.
- U.S. Bank told USA Today that it was enhancing its “skip-a-pay” and payment deferral programs.
- Synchrony Bank says it will consider requests to waiving certain fees and increase credit lines.
- Citi says it will talk to customers about increasing credit lines and giving customers more time to pay.
“Right now, many of them are accommodating, because frankly, it’s a difficult time for all of us,” McLeod said. “So, you know, they’re going out on a limb to help out people who are in need. And everyone is in need right now. It’s completely changed the environment, so I think many of them will be accommodating.”
The Mortgage Bankers Association reported Tuesday that a survey indicates a 3,000 percent spike in March in requests by borrowers to temporarily suspend or reduce mortgage payments.
Ira Rheingold, executive director of the National Association of Consumer Advocates, said the most important thing is to take action early. It likely will be difficult to reach overwhelmed employees at banks and credit card companies, he said.
“Try to get ahead of it,” he said. “It’s sill early in the month.”
McLeod said people who still have jobs should be preparing for the possibility they will lose them if the crisis drags on.
“If you are still working but don’t yet have an emergency fund, that should be your highest priority,” he said.
It can be tempting to skip rent to take advantage of the governor’s moratorium on evictions, but Rheingold said that is not wise. “Ultimately, you have to pay it. … I would not be paying my credit card debt and not paying my rent.”
As in any crisis, Rheingold said, the basics are most important.
“People should make sure there is enough money to eat,” he said. “People should make sure to pay rent and utilities.”
Rheingold said there is much uncertainty. Taking advantage of a delayed payment program, for instance, is not supposed to negatively affect a person’s credit score. But Rheingold said it is impossible to say for sure.
He added that negotiating deals with credit card companies might not be easy.
“It should be a really simple process,” he said.
Rheingold said he believes lenders are willing to give people more flexibility than usual, but he said employees of the companies likely will not be able to devote a great deal of time to individual borrowers.
“The bigger issue is simply staffing issues,” he said.