Talking to your creditors if you're having trouble paying your bills
Monday, 22 June 2020
Millions of Americans across the country are dealing with the financial fallout of the COVID-19 pandemic.
In fact, according to a recent survey by the National Endowment for Financial Education, 88% of Americans are experiencing financial stress as a result of the crisis. Nearly 50% of those surveyed said they were worried about being able to pay their monthly bills.
However, many banks, lenders and utilities are currently offering assistance to customers facing financial hardship due to the crisis. For example, BBVA has a dedicated Online Payment Assistance Portal where customers can learn about relief options and request payment assistance.
What types of payment assistance are available?
Coronavirus-related assistance options vary by lender or creditor, but many are intended to allow customers to modify or delay payments while still protecting their credit score. Some of these include:
- Reduced interest rates, extended repayment terms, or the option to defer (skip) or make interest-only payments for a period of time on mortgages and other loans.
- Waived late fees, reduced interest rates or extended payment due dates on credit cards, as well as the option to make lower monthly payments or defer payments for a specified period of time.
There are also financial assistance options mandated by the CARES Act, which Congress passed to help Americans and small businesses during this time. These include allowing people to access retirement funds penalty free, reducing or postponing mortgage payments for federally backed loans and helping customers pay their utility bills.
What should I need if I can't make my monthly payments?
Contact your creditors. If you are unable to pay your monthly bills, be sure to let them know before you miss a payment. This is true with banks and credit card companies, but also with landlords, rental companies and utility providers. Don't assume you can simply skip payments due to the COVID-19 crisis. Reach out via phone, email, online chat or another communication option. Be prepared to provide details about your situation and why you are seeking relief.
Negotiate a repayment agreement. Start by telling your creditors how much you can reasonably pay each month. If you are unable to pay anything, let them know that as well. It's important to agree to repayment terms you can stick with, so being honest about your ability to pay is key. Ideally, your creditor will present a repayment plan that works for both of you.
Understand the terms of your repayment agreement. Some relief options, such as extending the term of a loan, could result in you paying more in the long run. Determining the short- and long-term financial impact of the repayment agreement can help you decide if immediate financial relief outweighs paying more over time.
Stick to the agreement. Once you have negotiated a revised repayment plan, do your best to adhere to the terms. If you don't, you could face fees, penalties and damage to your credit score. If you find yourself unable to make the agreed-upon payments, contact your creditor again before you miss a payment.
Beware of scams. Unfortunately, there are people who will take advantage of others during difficult times. To avoid scammers, don't respond to calls, emails or texts offering financial assistance or debt relief. The safest bet is for you to reach out to your creditor directly and avoid unsolicited, third-party offers.
Where else can I turn for help with my monthly payments?
Right now, many creditors and lenders genuinely want to help their customers get through this crisis. However, there's no guarantee you will be able to get relief from all your creditors.
If you need additional assistance, non-profit credit counseling organizations like the National Foundation for Credit Counseling have experience dealing with creditors and can negotiate on your behalf. They can also review your overall financial situation and help you make a plan for managing your debt and other expenses.
Remember: You're not alone
There are very few Americans who have not been touched by the COVID-19 crisis. If you find yourself struggling financially during this time, you are not alone. Taking proactive steps like talking to your creditors can help you gain control of your finances and protect your credit score. Step by step‚ with assistance—you'll be in a better position to move forward.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA USA does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
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