If you’re facing any kind of financial challenge related to COVID-19, you are not alone. Millions of people have already felt the economic impacts of COVID-19, and that number is expected to rise. Because of those numbers, financial institutions, federal and state governments, and service providers are all trying to figure out the best ways to assist those in need. While there are options out there, figuring out what kinds of payment assistance, forgiveness and forbearance are available specifically to you can be overwhelming.

To help you in your research, here is a guide to debt forbearance, forgiveness, and relief during COVID-19. Read on for the information you’ll need to help you access the assistance you need right now and the tips to get the most out of what’s out there.

Please know that new programs and relief options are still in the works as the outbreak continues to spread. This guide is up-to-date as of April 24, 2020.

One more note: Our hearts go out to everyone who has been impacted by COVID-19. We hope this guide helps to provide some insight and wisdom if you require payment relief or forbearance on your debt and payments at this time.

Your guide to understanding payment forgiveness, forbearance and relief programs on your mortgage, loans and credit cards

This guide covers some of the major developments introduced to help you if you have been financially impacted by COVID-19, including what your options are for:

  • Federal Student Loan Debt
  • Private Student Loan Debt
  • Car Insurance
  • Health Insurance
  • Renters Protections
  • Homeowners and Mortgage Debt
  • Credit Cards
  • Personal Loans
  • Auto Loans
  • Business Loan Debt

Student Loan Forbearance and Forgiveness

One of the biggest myths about student loan debt and COVID-19 is that all federal student loan debt is forgiven or eliminated. As of the time of writing this on April 24, 2020, federal student loan debt has not been forgiven. There is, however, some relief that student loan borrowers may be able to take advantage of.

Federal Student Loan Debt Forbearance and COVID-19

As part of the CARES Act that was signed into law in late March, all federal student loan debt has been placed on temporary forbearance until September 30, 2020. This means that if you have federal student loan debt, you do not owe any payments and your interest rates have been reduced to 0% until September 30, 2020. After that date, the 0% interest rate will be removed, and your normal monthly payments will resume on your scheduled due dates. You will not be required to make up for any of the payments you didn’t make during this period.

The CARES Act also mandated that anyone who was enrolled in college who received a Federal Pell Grant will not be required to return that money if they had to drop out of school because of COVID-19.

Private Student Loan Debt Forbearance and Assistance

While there hasn’t been federal action to assist anyone with private student loan debt, many private student loan servicers are offering COVID-19 related assistance or relief at this time.

Some companies are offering temporary forbearance, which can pause payments for a set period of time. Other companies are offering programs that reduce monthly payments for anyone’s income that was affected by COVID-19.

To take advantage of any relief opportunities related to private student loan debt, contact your student loan servicer.

Assistance and Relief Programs for Car Insurance

Large auto insurers recently made news when they announced that they would temporarily provide relief for policyholders.

Some companies are giving ‘back’ a percentage on premiums for April and May 2020, which means you might see a reduction in your payments. Other companies are offering flat credits and refunds, which means you may be seeing some money in the mail soon.

Other types of car insurance relief for COVID-19

In addition to credits for policyholders, some car insurance companies offering support in other ways. Many larger insurers are promising not to cancel coverage if someone cannot pay their bill because of the coronavirus outbreak. Others are providing billing relief by suspending fees or allowing you to defer payments.

COVID-19 and Your Health Insurance Plan

During a public health crisis, it’s more important than ever to understand your health insurance policy. Whether you receive health insurance benefits from your employer or through a marketplace, knowing the ins and outs of your policy, what you’re covered for, and what happens if you can’t pay for health insurance premiums are essential.

In addition to what is covered in your policy, here are some of the other ways health insurance providers are assisting their policyholders during COVID-19:

  • Covering cost-sharing (like copays) on COVID-19 related expenses including testing and treatments
  • The promise not to remove coverage if you can’t pay your premium because of financial challenges related to COVID-19
  • As part of the CARES Act, supporting telemedicine and virtual care

What protections and relief are available for renters?

Much debate has surrounded how to help those who are struggling to pay their rent during the COVID-19 outbreak. Besides a few exceptions through the CARES Act, there are not currently any federal protections or assistance for renters during the COVID-19 outbreak.

In lieu of federal protections, however, many cities, counties, and states have introduced protections to prevent renters from being evicted from their homes. Many states have also paused all current eviction proceedings.

Contact your local and state renters’ or housing authorities to learn more about what you may have available to you.

Mortgage Forbearance & Relief for COVID-19

Mortgage forbearance allows you to pause payments or reduce the payment amount for a temporary period of time. During the coronavirus outbreak, many mortgage servicers are offering forbearance options that can help provide some relief to anyone experiencing financial strain because of the virus.

But do your research before taking any forbearance options that your mortgage servicer may provide.

Why? A forbearance will likely impact your mortgage payments in the future, and the effects will vary widely depending on your mortgage servicer.

The CFPB also advises that you ask yourself questions like:

  • Will your loan term be extended if you accept a forbearance option or will it remain at the original term length?
  • Will you have to owe your unpaid payments in a lump sum after your forbearance period?
  • Will your monthly payments be higher after the forbearance to make up for the payments you didn’t make?

The CARES Act has helped to protect Americans from eviction if they miss 3 payments on Freddie Mac or Fannie Mae-backed mortgages because of COVID-19. But if you have any concern you may not make a mortgage payment, the most important action you can take right now is to get in contact with your mortgage servicer.

Credit Card Payment Assistance For COVID-19

Falling behind on credit card payments is becoming a reality for more and more Americans as they juggle several payment obligations.

While everyone’s financial situations are different, your first line of attack in making credit card payments is just to try to pay your minimum each month. While you’ll likely be charged interest on any unpaid balance, paying the minimum keeps you from going past due. Missing credit card payments may have long-term negative impacts on your credit score and with your credit card company.

If just making the minimum is not an option right now, some credit card companies are offering COVID-19 related assistance. The options from major credit card companies are a mixed bag. Some are waiving fees or allowing you to defer payments for a few months, but others are offering emergency loans, and credit limit increases to existing customers.

Paying Off Personal + Auto Loan Debt During COVID-19

Your personal and auto loan debt will likely not be forgiven, but loan servicers may offer types of forbearance or relief that can help you in the short-term.

Like credit card companies, many auto and personal loan servicers are providing some assistance for anyone financially struggling because of COVID-19. Some are offering reduced payments or pausing payments, but what is available will depend on your loan servicer.

Before accepting the terms of any forbearance or debt payment relief during COVID-19, make sure you understand how that relief will impact your loan and future payments.

How the Coronavirus is Impacting Business Loan Debt

Many small business owners and self-employed contractors are facing tough decisions—and figuring out how to pay off business loans is one of them.

In mid-April, a second round of federal small business assistance began working its way through legislation to replenish funds that were introduced through the CARES Act. Some of the ways you may be able to access assistance programs as a small business owner include:

  • Forbearance if you participate in the payroll protections program
  • Emergency Disaster Loans (EIDLs) up to $10,000
  • Other payment relief for existing Small Business Administration (SBA) loans

In addition to federal assistance, many municipalities and states are offering grants and other types of assistance for small businesses that can help cover debt payments or other obligations your small business may have.

What you should do if you need payment relief during COVID-19

1. Get your paperwork together

Many of your service providers will have programs to provide assistance. They may, however, require you to prove that you’ve been financially disrupted by COVID-19. While it may feel unnecessary or perhaps intrusive during your time of need to ask for documentation like that, companies just want to make sure they can provide relief for the people who need it the most. So, to make sure things run as smoothly as possible, be prepared to have some kind of documentation to show your circumstances to any company you reach out to.

2. Contact your institutions

You may have received emails or letters with information about what your service providers might be offering, but it’s important to take advantage of them.

While some companies are automatically providing relief, others will require that you ask or fill out a form. If you need this relief, do not hesitate to get in contact and get the help you need.

Many companies have dedicated phone numbers and websites so you’ll be able to speak to the right people, even if many phone lines have long wait times to connect right now.

Pro-tip: Be sure to communicate that you are in need of assistance, not just that you’re asking about it.

Do your research on federal and state relief programs

A lot of the federal action makes the news, but make sure to stay up-to-date on everything your state is doing to provide relief right now. State lawmakers are passing new bills every day to keep its people safe and employed right now, so make sure to follow the latest.

Contact other financial companies you do business with

If you’re not able to salvage what you need from relief programs, you may want to consider other measures to get the money you need to stay afloat.

Connect with your local financial institutions to see if they have anything available. Community lenders and small business associations may be providing some assistance.

Additionally, if you belong to a credit union, now is the time to see if you can take advantage of any membership benefits.

Use your savings and other assets to pay for the essentials

If you’ve been fortunate enough to save up an emergency fund, now may be the time to dip into it (it’s there for emergencies, so use it if it’s an emergency).

And while we don’t recommend tapping into your assets like retirement savings often, using your assets to help cover your expenses might be a responsible financial choice during emergencies.

One of the consumer benefits of the CARES Act included the IRS waiving the 10 percent tax penalty for early withdrawals from qualifying plans and lengthening the time to pay back a retirement loan. These benefits are only for certain individuals who have been impacted by COVID-19 who have qualified retirement packages, so be sure to contact your employer and your service provider before taking any action against your retirement savings.

If you don’t have a savings, here are 5 things to do if you don’t have a savings.

Final note about seeking payment relief and forbearance during COVID-19

Debt forbearance, payment assistance, and COVID-19 relief are out there for those who need it. These options might not be able to cover all of your financial challenges, but they can help to ease some of the burdens you’re facing. A lot of service providers and government agencies have rolled out temporary solutions, but they will likely change and expand those options if the economic impacts continue to worsen.

And while we hope this guide helps to clarify and provide some wisdom into navigating forbearance and payment relief right now, we recognize these solutions are not going to help everyone.

For more information, visit our dedicated COVID-19 Resources page or drop us a line in this quick survey to help us understand what questions or information we can provide right now.

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