Home & Family
With the nation in a state of emergency because of COVID-19, many are taking on expenses they would not normally have. Some have lost income while others continue to work.
At some point, people will run out of money. With this unknown factor, you must decide how to wisely spend your regular or unemployment income as well as the stimulus funds from the government. No matter what income is being received, some consumers will not be able to pay their bills.
Make a Plan
If you become flooded with bills, it’s time to act sooner rather than later. Don’t wait until it is too late to do something. Start by figuring out how much money you must spend, which will require setting up a spending plan.
First, cut back on your spending as much as possible. Buy only things you need. Needs are necessities that include housing, food, toiletries, utilities, electricity, water, insurance, prescriptions, and a phone, in many cases. As much as it may hurt, put other things that you just want on the backburner for now.
If you have been laid off work, consider filing for unemployment. If you are self-employed, you should also qualify under the new stimulus packet.
Try to continue paying your bills on time and as agreed to so they will remain current. Eventually, you will pay off what you owe if you are not missing payments. If you do miss payments due to COVID-19, catch up as soon as you can.
Contact the companies you owe—all of your creditors. Try to work out a payment plan that you can afford. If your bills get out of hand, consider seeing a credit counselor for guidance. Look for a nonprofit consumer credit counseling agency.
If this does not work, you may consider applying for a consolidation loan, which is one large loan to pay off all of your debt. The payment on the new loan should be smaller than your previous total monthly payments.
If you can’t afford to make payments in full because you are temporarily out of work, you may be able to set up a payment plan to pay the amount due in small installments over time. Make sure it’s a plan you can afford.
Keep in mind that if you fall behind on payments, your debt will be considered delinquent. This could possibly harm your credit score. Your delinquent account(s) could be described as 30-days, 60-days, or more days delinquent.
If you continue to fall behind in making payments, your debt may be in default. This will vary by company. Missing one loan payment could put you in default. For others, it may take several days, weeks, or months of nonpayment before you are considered in default. Contact your creditors to see if they have new guidelines during the current coronavirus crisis.
Avoid ignoring a debt collector. If you are contacted, verify as soon as possible that any debt you are asked to pay is valid. Seek help sooner, not later.
In some cases, companies give up trying to collect debts and sell your account to a debt collector. This means your debt is in collections. You do not want this to happen A debt collector is responsible for trying to collect the debt.
Assistance for Small Business Owners
If you are a business owner and having a difficult time paying your bill, check the CARES Act options for small businesses. You may qualify for assistance for yourself, your business, and your employees.
Know where to go for help if you know that you are running out of money. Check out the Alabama Extension website for educational information that may be of interest to you. Also find tips helpful for your home and family. Alabama Extension also has finance and career information for those facing financial problems resulting from the coronavirus.