Posted by David Falvey on Wednesday, January 6th, 2021 - 3,365 views

The information in this document will help you understand whether you still have to pay your debts during the COVID-19 pandemic.

The COVID-19 pandemic is devastating the country. Over 320,000 people in the United States have died due to the pandemic. A majority of workers, especially workers who can’t work from home, are suffering financially. Many people are finding it very difficult to pay their bills on time. If you’re struggling financially, you’re not alone.

The federal government and state governments are offering some financial assistance. For example, the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act and the subsequent stimulus act passed in December 2020 have provided stimulus checks for people who make less than $75,000 a year and some additional pay for unemployed workers. The CARES Act also authorized mortgage forbearance of up to about a year for homeowners who find paying their mortgage a hardship.

According to US News, some of the additional financial benefits for Americans who can’t pay their bills include the following items:

  • Mortgage payments
  • Rent payments
  • Student loan payments
  • Credit card bills
  • Bank fees
  • Car payments
  • Utility bills

Most of the protections involve forbearance. Forbearance means that your duty to pay the bills is placed on hold for a period of time. Ultimately, the debts will need to be paid. The forbearance generally means debtors can have breathing room. They don’t have to pay the bills while the pandemic rages.

When the pandemic ends, they will need to pay the amounts that were paused – either in a lump sum or through some type of payment plan. Possible payment plans include paying the paused amounts at the end of the loan/debt period or paying a little extra each month to catch up.

Debtors can speak with an experienced debtor’s attorney to understand which laws and regulations apply in their state and to their unique financial situation.

Making Mortgage Payments

The US News article states that nearly 3.8 million Americans have entered into forbearance plans as of August 2020. The CARES Act essentially allows homeowners to contact their mortgage company and request the ability to pause their federally backed or owned loans for 180 days.

Homeowners can seek another 180 day extension. Some private lenders may also agree to the forbearance because it’s the decent thing to do (repossessing a home during a pandemic is rather cruel)—and because selling homes during a pandemic is difficult.

Many people simply can’t afford to buy a new home while the pandemic is causing them to struggle financially. Federal loans generally include:

  • Federal Housing Administration (FHA) loans
  • US Department of Veterans Affairs (VA) loans
  • Fannie Mae loans
  • Freddie Mac loans

For more information about whether your loan is covered by the CARES Act, homeowners can consult the Consumer Financial Protection Bureau website.

Forbearance generally means that interest and fees don’t accrue during the forbearance period.

Each state may have additional mortgage forbearance and mortgage aid assistance during the pandemic.

Making Rent Payments

The CARES Act did provide for eviction protections but only through to July 2020. “To prevent a wave of evictions, Trump issued the “Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners” on Aug. 8.” – though experts question how much protection the Executive Order really gives homeowners.

Generally, legislation provides stronger protections than an Executive Order.

Some states and cities have their own laws which required that landlords hold up on evictions for a set period of time.

As a general rule, renters should try to prioritize their rent payments for financial reasons and because having a suitable place to live is essential to lessening the risk of contracting COVID-19.

Making Student Loan Payments

Generally, the CARES Act provides some protections for federally held student loans.

The CARES act suspends interest payments through September 30, 2020. “Trump’s “Memorandum on Continued Student Loan Payment Relief During the COVID-19 Pandemic” extends student loan relief until Dec. 31.”

“With the CARES Act, paused student loan payments count toward loan forgiveness programs, such as Public Service Loan Forgiveness, so participants in those payment plans don’t need to pay their student loan bill to continue making progress toward their forgiveness goal. This is a rare case in which you shouldn’t pay your bill, even if you can afford it.”

“Automatic relief only applies to loans owned by the Department of Education, Harrington says. So if you have Perkins Loans, for example, which may be owned by the institution you attended, you cannot seek an automatic reprieve.”

If your student loan is held by a private holder, you need to contact that holder about forbearance during the pandemic. Your state may also provide some student loan protection.

Paying Credit Card Bills

The US News article recommends speaking with your credit card company if you can’t manage your credit card payments. Some credit card companies may offer forbearance so you can delay or reduce your payments for a specific amount of time. Your credit company may have online forms that you can use to request forbearance.

Bank Fees

US News reports that many banks are waiving and even refunding bank fees during the pandemic. You likely need to contact your bank and monitor your accounts to see what fees are being charged and whether there is relief for those bank fees.

Car Payments

Some car lenders may be willing to grant some type of forbearance if you contact them and explain how your financial situation.

Utility payments

If you’re experiencing financial hardship. many utilities (electricity, water, and gas) are willing to work with residents to continue these services . Some states and municipalities are offering protections including suspending utility cutoffs during the pandemic.

Debtors may also need to make arrangements with their healthcare providers during this difficult time.

If none of these protections apply to you and you’ve found that your debts have become too much to handle, you are advised to speak with a bankruptcy attorney. They will give you the details you need to get over this hump, and possibly give you the ammunition you need to get protected from having to pay your creditors during these trying times.

Atty. Dave Falvey
Attorney David Falvey has been practicing Connecticut Bankruptcy Law for over 25 years and has helped Connecticut residents get through all their financial difficulties while helping them get their finances back on track.