What You Need to Know About Dealing with Debt During the COVID-19 Pandemic

Coronavirus

One of the many of uncertainties facing consumers right now is how to manage the household budget and debt during the coronavirus (COVID-19) national emergency. The fear, for many, is the loss or reduction of wages, delay of unemployment benefits and the impending due dates for important necessities like rent, mortgage, water, utilities, medication refills or restocking of grocery essentials.

In terms of credit card debt, the Consumer Financial Protection Bureau offers reassurance that many lenders are being flexible when it comes to paying monthly bills. While it’s important to keep a clean credit report and maintain payments as best as possible, CFPB stresses it’s even more important to reach out to creditors and tell them help is needed during a difficult time.

Help is being provided through the recently enacted CARES Act, requiring lenders to report to credit bureaus that consumers are current on their loans only if the consumer has reported that they needed the help during the pandemic.

The CARES Act also allows homeowners with federally backed loans who are affected by the pandemic to request a forbearance of their mortgage for up to 180 days. 

If you’re behind on student loans, the CARES Act automatically suspends payments on federally-held student loans through September 30, 2020. 

In addition, the CARES Act requires lenders to voluntarily provide payment relief to consumers and accurately report this to the credit bureaus as it relates to the pandemic, and there is some flexibility in the timing of investigating disputes. This means the CFPB will not bring enforcement action against firms who exceed an investigation deadline, if the disputed company is making a good faith effort to resolve the situation.

There are ways to protect your credit rating during a pandemic, aside from maintaining a good payment history and having an excellent debt to credit ratio. More information can be found in CFPB’s Credit Reporting Guidance.

If you are looking for a loan, see BBB’s advice on Looking for a Loan? Know Your Rights.

For more information:

Source: BBB.org

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