Modern financial markets are constantly on the move. The recent spread of the Coronavirus or COVID-19 has sent global stock markets into a significant phase of volatility, with the benchmark Dow Jones Industrial Average seemingly up or down by 2000 points daily.
Not only is the virus affecting long-term stock investors, but it is also having a direct impact on peoples’ everyday lives. Many states have now, by order of the Governor, closed bars, restaurants and other meeting places until the end of March. This action came on the heels of both the NBA and NHL suspending the remainder of their seasons. MLB has also pushed back the start of its season by two weeks.
Many companies have decided to close operations or to sharply scale down as much as reasonably possible. Because of this, many people are no longer working. For those that are not able to work, some companies may still be paying them while others may not. The bottom line is that the Coronavirus outbreak can put many people into financial hardship.
A financial hardship can come in various shapes and sizes. One borrower may be unable to pay a credit card payment on time, while another may lack the funds necessary to pay for housing costs such as a mortgage or rent. Whatever the case may be, there are steps that borrowers can take to try to minimize the potential damage. The key is to take action, and to do so as early as possible.
Many creditors are simple to deal with, and some of them may even be enjoyable to speak with. There are some key points to discussing a financial hardship with a creditor. The borrower will want to make sure they are followed, in order to produce the best outcome possible.
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The Key Points –
The first key to speaking with a creditor is being honest. Creditors have heard it all before, and are much more likely to help if they feel you are being straightforward and truthful. If you lost your job because your company shut down to prevent further spread of the virus, tell your creditor that. If you need to spend money for bills on medical needs, do so and tell your creditor about it. The bottom line is to be honest and let your creditor know the challenges you are facing.
Try To Have A Plan –
Although creditors may be forgiving for a period of time, they do want to get money owed to them. If possible, formulate a plan to get out of the hole and discuss this plan with your creditor. Any creditor may be far more willing to let a late payment slide or to avoid charging late fees if they feel good about getting the funds owed in the near future. Knowing when funds may arrive, even if a bit longer on the time horizon, may buy you some leniency.
Track Everything –
Many creditors, such as credit card companies, are very large organizations. Due to their size and scope, it is imperative to take notes of all discussions and any negotiations with your creditors. These notes, which may include representative names, payment amounts, due dates, and more, may be referred to later if a disagreement comes up. Many creditors have numerous collection forbearance options available. It is your job to find them and decide which will work best for you. It’s always a good idea to get everything in writing, even if it’s just an email from the creditor.
Hold Up Your End Of The Deal –
If a creditor is willing and able to make a deal with you to get your account straightened out, it is critical to follow through on your part of the agreement. For example: Do not agree to make a payment at the end of the month if you know you will still be unable to do so. Only agree to do what you know you will be able to do, and things will go easier for everyone involved. Be sure to write down payment dates, amounts, or other arrangements and to make them on time.
Here are a few other recommendations from the National Foundation for Credit Counseling (NFCC):
- Start the conversation by explaining the cause of your financial hardship. Be honest, calm, and detailed in your explanation. Include information about loss of hours, wage reductions, and any other circumstances that have a direct impact on your ability to pay your account as agreed.
- Ask about special hardship programs that can help keep your account up to date based on your current and anticipated ability to pay. While you can mention specific examples, you should ask the question in an open-ended way to see what the creditor has to offer. Not all creditors provide the same solutions, so you may find differences among your creditors.
- Once you have come to an agreement about the program that would be the best fit for your situation, be sure to request a confirmation of the adjusted terms in writing. An email from your creditor should be sufficient.
- Make sure that you understand what is expected of you according to the new temporary terms and ask the creditor if there is any room to further adjust or reassess the situation if conditions continue longer than expected or if they worsen.
- Remain in touch with the creditor to alert them of any changes that may influence payments.
- Work with a nonprofit credit counselor to work on an emergency budget and help get your finances back on track.
Advantage CCS remains committed to helping our community through these difficult times. Our credit counselors are on-call to help answer questions and create emergency budgets to get individuals and families through this pandemic, and the financial and economical effects it’s having on the world. Contact us via our website at https://www.advantageccs.org or give us a call toll-free at 1-866-699-2227. It’s always 100% free and confidential to speak with one of our certified credit counselors. We’re here for you!