The COVID-19 outbreak is continuing to impact people across the globe. Many are being forced to stay home from work, sometimes along with children whose schools have closed, and some have even been laid off. With so much uncertainty surrounding the situation, it’s inevitable to have major financial concerns, especially if you’re in debt. While this time is going to be tough for everyone, there are still smart financial moves to make, and avoid, so that when the crisis is over, you’re not deeper in the debt hole.
While governments work to find a solution for assisting citizens financially, here are some tips for debt relief and protecting yourself in the meantime.
Contact You Lenders, Loan Services, and Debt Collectors
If you’re unable to pay your bills at this time, you should contact your lenders and servicers immediately to let them know about your situation. Regulators are encouraging financial institutions to work with and assist their customers during this difficult time. Lenders and servicers may be able to offer different options to help you, such as waving certain fees, overpayments, etc. They may even be able to go as far as delaying, adjusting, or skipping payments.
If you currently have debt in collections, contact them immediately as well. They should be aware of your current situation so you can identify a realistic payment plan. The Bureau offers a number of resources for contacting and negotiating with debt collection companies.
When contacting your lenders or collection agencies, be prepared to explain:
- Your situation
- How much you can currently afford to pay
- When you’re likely to be able to restart regular payment
Look for Opportunities to Cut Expenses
If you’re worried about your general level of cash flow during the outbreak, as most people are, it’s smart to start cutting expenses. With quarantine, the usual suspects might not be practical, such as Netflix or other streaming services. However, there are many other ways to cut costs during this time without completely depriving yourself. For example, making the majority of your meals at home instead of eating out (although states have started closing restaurants and bars). You can find other ways to save by evaluating your most recent bank and credit card statements and identifying any frivolous expenses. You might find you’re automatically paying for monthly subscriptions or memberships that you stopped using a long time ago. Once you’ve made all possible cutbacks on “wants,” take a look at your “needs.” Oftentimes there’s a lot to save in this area, particularly on bills. Consider things like turning your thermostat up or down a few degrees, cutting back on water, and switching to energy efficient light bulbs.
Be Aware of Scam Attempts
There’s always scammers looking to take advantage of people in vulnerable situations. This is only more true during crisis, emergency, and natural disaster. Beware of emails, texts, or social media posts that may be selling fake products or information about emerging coronavirus cases. Seniors also need to be extra cautious during this time, as they are regular targets of scammers and are at higher risk of contracting the virus. If possible, frequently check up on your older relatives with phone calls or video chats, ensuring they’re okay during this time of social isolation and not failing to scammers in an attempt to connect with others.
Here are the FTC’s warnings about scammers:
- Don’t click on links from sources you don’t recognize
- Ignore emails claiming to come from the Center for Disease Control
- Avoid online offers for vaccinations or treatments
- If someone is asking for donations in cash, gift cards or wiring money, stay away!
- Beware of “investment opportunities” in any company claiming that it can detect, prevent or cure coronavirus.
Consider Debt Consolidation
Interest rates have plummeted during the COVID-19 outbreak, resulting in some of the lowest borrowing costs in history. If you have a lot of high-interest debt, you may want to consider borrowing a personal loan for debt consolidation. Debt consolidation involves combining what you owe into one lump payment with one interest fee. You then receive a loan to pay off all existing debt, and in turn make one monthly repayment to the lender. A debt consolidation loan generally has a lower interest rate than the previous debts and allows you to pay off everything in one monthly payment.
The most important thing to remember during this time is that it’s not permanent. Yes, there is a lot of uncertainty about how long it will last and how bad it will get, but it’s important to stay calm. Panic can lead to irrational thinking and poor financial decisions, only making the situation worse. Stay smart and stay safe.
If you’ve found yourself in a state of financial emergency and need help, consider a personal loan from TLC Loans. We know that many companies are going through difficult times right now. We are lucky enough to be fully staffed, with no backlogs, and are ready to distribute loans, even as soon as the next business day.