Dealing With Debt During the COVID-19 Pandemic

Apr 10, 2021 | Debt Collection

Dealing with mounting debt is challenging, and the COVID-19 pandemic has made matters even worse for many Americans. Fortunately, state and federal governments are providing resources and relief to those affected in different ways. While you might benefit through such measures, it is also important that you secure your financial security by taking some steps on your own.

Government Programs

The American Rescue Plan that President Biden signed into law on March 11, 2021, brings with it a $1.9 trillion stimulus package that includes housing assistance, tax credits, extended unemployment benefits, stimulus checks, as well as assistance for small business owners.

Stimulus Checks

If you and your dependants qualify, you stand to receive $1,400 each. You would be eligible if you earn an adjusted gross income (AGI) of $75,000 or below per year as an individual, or 150,000 or less as a married couple. You would qualify for phased payments as an individual or a couple if your AGI is below $80,000 and $160,000, respectively.

Unemployment Benefits

Granting of federal unemployment benefits that amount to $300 per week – which is in addition to state benefits – are set to stay in place until September 6, 2021. You may also benefit through a waiver of income tax on the first $10,200 you received as unemployment benefits in 2020.

Relief for Homeowners

Homeowners may avail of forbearance programs by contacting their mortgage providers, through which they may reduce or pause making their mortgage payments. The foreclosure moratorium will remain in place until June 30, 2021. If you have a VA, USDA, HUD, or FHA loan, you might need to file your request before the end of June. This deadline does not apply on Freddie Mac and Fannie May loans.

Relief for Renters

The new law has extended the evictions-related moratorium until June 30, 2021. You may qualify if you earn less than $99,000 per year as an individual or less than $198,000 as a couple. You might also qualify for assistance provided by state and local governments.

Relief for Students

The extension of the moratorium on student loan payments now provides students relief until September 30, 2021. Students may suspend making payments without incurring additional interest charges.

What You Can Do on Your Own

While dealing with debt that you have trouble repaying can be daunting, you can take measures to make the road ahead a little smoother.

  • Stop borrowing. Keeping your credit card accounts active can help rebuild your credit score as you keep paying off outstanding balances. Check if you have any unused rewards on your cards, which you can cash in on now.
  • Contact your lenders. Various
    financial institutions such as credit card, loan, and utility service providers have offered payment relief as well as waiver of fees. If you’re having trouble keeping up with any of your repayments, contact your lenders at the earliest.
  • Don’t cancel your cards. Keeping your credit card accounts active can help rebuild your credit score as you keep paying off outstanding balances. Check if you have any unused rewards on your cards, which you can cash in on now.
  • Seek professional assistance. If you’re unsure about what path to follow, consider seeking professional assistance from a reputable credit counseling agency. If you feel you’re being held responsible for a debt you don’t owe, you might benefit by going the debt validation way.

Conclusion

Several people across the U.S. are suffering financially because of the insofar non-relating COVID-19 pandemic. Having to deal with existing debt simply adds to the woes. While federal and state governments are taking measures to ease the strife, it’s important that you take some proactive steps as well.

If, at any stage, you feel you’re being pushed by collectors, or that you’re not getting what’s rightfully due to you, you might benefit by getting legal advice.

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