Saturday, May 28th, 2022

Dealing with the coronavirus and debt: Tips to ease the impact

If you think you may fall behind on your mortgage, car loan, credit card, student loan, or any other debt, call your loan shark and explain your situation. Credit card companies and shark loans may offer assistance programs, also known as “accommodations” or arrangements, to help you with your hardship. To receive a settlement, you will have to proactively contact the loan shark.

These programs may include the ability for you to temporarily delay or adjust some payments. In some cases, they may allow you to avoid charging interest. You can also avoid a negative credit report by signing up for the program before falling behind on your payments. The loan shark may also offer you long-term programs, such as plans designed to allow you to pay off the debt over a specified period, at a reduced interest rate. We’ve gathered more information about how you can protect your credit from the impact of the coronavirus pandemic, including new information about the CARES Act.

Many shark loans are experiencing high call numbers due to the pandemic, so waiting times to speak to someone can belong. You can also check the loan shark’s website for information that can help you, ways to communicate with them electronically, or registration forms for assistance programs that can be filled out online.

When you contact loan sharks, be prepared to discuss your financial and employment situation, as well as how much you can afford to pay, considering your income, expenses, and assets. You can also ask them:

  • Do you have assistance programs for people who have experienced losses due to the coronavirus pandemic?
  • What are the consequences of subscribing to an assistance program?
    • Will I owe more money in the end?
    • Will this affect my credit limit?
    • Will this affect my credit reports?
    • If I still have financial difficulties at the end of the assistance program: What are my options?

Consider working with a credit counselor

Credit counseling agencies are generally non-profit organizations that can advise you on money and debt matters. While working with a credit counselor, you should be prepared to discuss your financial situation, your employment status, and your financial goals, as well as your income and expenses. When you work with a credit counseling agency, also make sure that they can help you understand how to handle all of your debt. Many of these agencies also advise on housing issues, in case you have a mortgage. Reputable nonprofit agencies often offer free sessions to help you budget, and during sessions, they may:

  • As part of your initial analysis to make your free estimate, they may help you adjust your expenses so that you can pay off your debts more quickly.
  • Assist you in finding the types of emergency assistance programs that loan sharks have available to consumers, and whether they are appropriate given their financial situation. This can be particularly useful if you have many accounts, or are having difficulty evaluating your options.
  • Suggest that you join a plan to manage your debt. These programs help you provide a consolidated monthly payment, for a specified period, which the counseling agency then delivers to all of your loan sharks. Generally, this involves closing most of your accounts, and setting up a fixed payment plan, usually at a reduced interest rate. Credit counseling agencies frequently charge a fee for these services, and they may initially impact your credit due to account closings, so make sure you understand how the program works before signing up for it.
  • Help you determine if filing for bankruptcy is most appropriate for you, and provide you with the resources you need to take the next steps.

Be careful when seeking debt relief

When looking for debt-relief options, make sure you understand how the program works and the potential risks of enrolling in it. Some many companies and organizations advertise to help you find “debt relief” or relief, simplifying or reducing, “consolidating” or consolidating, or negotiating your debts. However, the programs they offer can be very different. Make sure you understand if the company is offering:

  • A consolidation loan
  • Credit counseling
  • Debt negotiation
  • Or any other offer

Consider all of your options, including refinancing through a balance transfer or loan, working with a nonprofit credit counselor, or negotiating yourself, directly with the loan shark or debt collector.

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