If you're out of work as a result of the coronavirus pandemic, you'll know that doesn't mean that the bills have stopped coming in. Millions of people are faced with making some tough choices, like determining which bills they should pay and which they should temporarily put off.
"It's a very difficult situation, and you're going to need to prioritize," says Jedidiah Collins, a certified financial planner who runs the company Rookie to Veteran in Seattle. "It's the definition of wants versus needs."
Collins says that when trying to determine which payments to make, everyone needs to ask themselves "whether they can live without" the product or service they're paying for.
That's the framework you should use when determining how to tackle your debt obligations during an economic crisis like the one we're living through now, Collins says. If you're not sure where to turn to get started, The National Consumer Law Center, a nonprofit focused on consumer advocacy, is making the digital version of its "Surviving Debt" publication free during the coronavirus outbreak.
Here are the debts that the NCLC and other experts recommend you prioritize during the current crisis.
Housing and related bills should be at the top of your list. For most households, housing is the largest and most important expense, since you need a safe place to live. Failing to pay your rent or mortgage could result in foreclose or eviction under normal circumstances.
Fortunately, many states and big cities have put eviction freezes in place to protect renters, and both renters and homeowners may find they have some leeway to postpone payments. But that doesn't mean you're off the hook for what you owe. You may end up having to pay all those missed payments back at once.
If possible, keep up with your payments, or contact your landlord or mortgage issuer to see if they can work with you.
If you've paid your rent or mortgage and ensured you have shelter, the next thing you'll want to do is make sure you're staying up to date with your utility bills, which would include services like water, sewer, electricity, and gas. Falling behind on your utility bills puts you at risk of accruing fees, could mean that you won't qualify for energy assistance programs, and could even result in having your utilities shut off.
If you're having trouble paying, reach out to your utility providers. Many, including ConEd, Duke Energy, FirstEnergy, and PSE&G, have hardship assistance programs that allow customers to defer utility bills.
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Your car payments should be pretty high up on your priority list, too. Missing car payments could result in repossession. Even with so many state orders to stay home, you don't want to be caught without transportation for essential errands or when it's time to go back to work.
For that reason, you'll need to stay on track with your car payments or work with your auto loan lender. Most major auto brands — including Ford, Toyota, and Nissan — are offering payment deferrals, waiving late fees, and otherwise inviting customers to contact them to discuss their options.
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There are numerous other types of debt that experts say can likely be put on the back burner for now, or at least negotiated. That would include debts like back taxes, medical bills, and even federal student loans, which won't need to be paid until October 1.
As for credit card balances, most major banks are allowing borrowers to defer their credit card payments for the time being. Many are also refunding certain fees and altering minimum payment requirements. You will need to call and ask to be enrolled, however.
Remember that ignoring your bills isn't a good idea, no matter how overwhelmed you may feel. If you can't cover a bill, be upfront about it: Contact your lender or creditor to let them know you're not going to be able to make a payment and see if an arrangement can be made.
"The goal is to stay on track," says Justin Halverson, a financial advisor at Great Waters Financial in Minnesota. "If possible, stay on top of your payments. That's priority No. 1."
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