Lose your job? Furloughed? Expert gives advice on how to pay your bills

LAKE MARY, Fla. - It’s the first of the month and bills due.  So what do you if COVID-19 has you suddenly unemployed, furloughed, or unable to pay up? 

First, you need to budget accordingly. It’s time to cut any non—essential expenses. That means ending your gym membership and trimming phone or internet plans. Daycare or monthly commuting passes might be paused or lowered during unemployment.  Consider extra work if you can to bring in income.

FPA is offering free financial guidance to Americans in need. A nonprofit credit counseling agency can also provide low cost help managing debt and creating a household budget.

Mortgage or rent:  “Here’s the first thing that you need to do. Contact your landlord or your mortgage company. Negotiate some arrangement,” certified wealth strategist Kat Almulla tells FOX 35 News. 

If you rent, she recommends offering to pay a portion of what you typically pay.  For homeowners, she says call your mortgage company. 

“Give yourself a good 90-day leeway and see if you can defer all together, and then start the payments up. A lot of companies can put those three months of payment on the back end. They can say, 'well we’ll extend your mortgage by three more months.' That won’t hurt you,” Almulla said.

If you hold a mortgage backed by Fannie Mae or Freddie Mac — about half of all mortgage holders do — there is help. The mortgage buyers have suspended all foreclosures and evictions for homes owned by their companies. They’ve also expanded their forbearance program, which could suspend payments for up to a year. Ask the company you make your payments to if you hold a Fannie or Freddie loan.

The federal government has also halted foreclosures and evictions for mortgages insured by the Federal Housing Administration.

After those calls, Almulla recommends figuring out what your daily necessities cost. 

“With the money that you have, the most critical thing is that you need to pay are food, utilities, medication,” Almulla said.  

If necessary, consider seeking aid for basic needs such as food and shelter. Or consider local food banks, which have more leniency in who they can help. United Way can also help you find social service support you may qualify for in your area.

Utilities: Gas, electric, and other utility providers often have assistance programs for customers who cannot pay in full. There are also government and charitable programs to help low-income or struggling households. Ask the utility provider for referrals

Credit card debt: Almulla recommends calling whoever carries the note on your car and your credit card company (if you’re carrying a balance) and start negotiating. 

“Credit card companies would rather work with you, even if you have to take a minimum payment and cut it in half, or even if you negotiate the interest on your credit card debit,” Almulla said.

Auto loans: If you are struggling to pay your auto loan or other debt, reach out to your lender. They’ve been instructed by federal regulators to work with borrowers impacted by the virus. Banks have said they are willing to make a variety of arrangements such as waiving fees, temporarily lowering interest rates or making other payment arrangements.

Student loans: Federal loan borrowers can now seek an emergency administrative forbearance, which would allow them to postpone payments for up to 60 days. Borrowers must contact a servicer to apply.

The federal government also lowered the interest rate on all federally held student loans to 0%. However, that will not lower the monthly payment; instead it will apply the payment entirely to the principle balance.

The government has also temporarily halted collections and wage garnishment for borrowers who’ve fallen behind on their federal student loans. It has instructed private collection agencies to follow suit.

If you have private student loans, contact your servicer for their repayment options.

In all negotiations, Almulla says get the name and direct number for the person you’re speaking to, write down the date and time of day you spoke, and ask for an email from that person, confirming the arrangement to which you have agreed.   Plus, give yourself some leeway. Almulla says, at this point, we don’t know how long the COVID-19 pandemic will affect jobs. 

“I would look at doing everything in a 90-day period. Don’t think 30 days. Give yourself 90 days, the whole second quarter,” Almulla suggests. 

Some information taken from the Associated Press.