The COVID-19 pandemic has already had an immediate negative impact for consumers trying to pay their bills. With millions of people losing jobs or working reduced hours the smaller paychecks will mean more accounts going into default. This post will give some practical tips as well as some updates on recent legislation.
The first thing to do if you anticipate not being able to make a payment is to contact your creditor and request a hardship exemption. We have seen mortgage services grant payment extensions to homeowners affected by natural disasters. The rationale should be the same for the Coronavirus pandemic. It’s always helpful to get the promised extension in writing. If your creditor won’t agree to put it in writing then be sure to take good notes as to who you spoke with and what they promised.
If it is too late and you have already started to miss payments there are some measures you can take to lessen the impact. You should check your credit report and see if the account is being reported negative. If it is negative and you have disputed the account you have rights under the Fair Credit Reporting Act (“FCRA”) 15 U.S.C. §1681i(b). Equifax, Trans Union and Experian limit your statement to no more than 100 words but that should be enough to explain the situation. It would be wise to consult with an attorney to have them assist you with this dispute to make it effective and to be sure it is in your best interest.
Finally, at both the federal and state level legislatures are working on bills to help lessen the financial distress faced by consumers because of COVID-19. At the time of this post here are a couple promising developments.
Two U.S. Senators introduced a bill to protect people’s credit scores during the Coronavirus outbreak. The Disaster Protection For Workers’ Credit Act will provide for an immediate four-month moratorium on all negative credit reporting and longer protections for people who face lasting financial hardship from the outbreak. The bill will also provide free, unlimited credit reports and credit scores for a year from the end of the crisis. Beyond this crisis, the bill extends these protections to people impacted by future major disasters.
HUD and the FHFA are also suspending all foreclosure and evictions for 60 days including for reverse mortgages. This would apply to single family homeowners with FHA-insured mortgages for the next 60 days (beginning March 18, 2020).
If you are falling behind on payments to creditors as a result of the Coronavirus please feel free to contact the attorneys at Golden & Cardona-Loya, LLP and we will provide a free consultation to let you know how best to deal with the situation. In times like these it’s best not to stand alone.