The COVID-19 pandemic has had a severe impact on people’s finances all across the United States. Many people have lost their jobs causing unemployment claims to soar. Unfortunately, that doesn’t mean the bills have stopped piling up. However, there may be a way to get some relief if you are willing to negotiate with your lenders and creditors. 

The Coronavirus Aid, Relief, and Economic Security (CARES) Act has helped people in many ways that are suffering financial hardship due to the Coronavirus pandemic. The CARES Act, which President Donald Trump signed into law on March 27, 2020, amends the Fair Credit Reporting Act (FCRA) to stop credit reporting during the COVID-19 pandemic. Under FCRA, if a creditor or lender makes an “accommodation” because you were affected by COVID-19, that creditor or lender must report your account as current to the credit reporting agencies as long as you weren’t already delinquent on payments. https://www.nolo.com/legal-encyclopedia/credit-protections-under-the-coronavirus-cares-act.html 

Under the CARES Act, debtors affected by Covid-19 are allowed to withdraw funds from most retirement plans without a penalty. You can reach out to your lender or creditor to find out what options are available. https://www.consumerfinance.gov/about-us/blog/protecting-your-credit-during-coronavirus-pandemic/

The CARES Act also applies to certain federal student loans as the Act suspended principal and interest payments on federally-held student loans through September 30, 2020. An Executive Order then directed the Department of Education to extend the suspension until December 31, 2020. https://www.consumerfinance.gov/coronavirus/student-loans/ 

Reach Out to Your Lender About Negotiations Due to COVID  

When a debtor fails to pay their bill – whether to a mortgage servicer, utility provider, credit card company or cell phone service company – there is a good chance that the lenders and creditors will report the payment performance to the credit bureau. However, during the Coronavirus pandemic, the CARES Act forbids credit reporting to be processed. Thus, if you are having trouble paying your bills during the pandemic, it’s important to reach out to your lenders and creditors as many have announced proactive measures to help borrowers impacted by COVID-19.

Creditors and lenders may be willing to defer payments, have a debtor make partial payments, forbear delinquency, modify a loan, give loan extensions, and/or reduce interest rates. Some lenders are also waiving late fees for borrowers due to the pandemic. 

COVID-19 Negotiation: How to Negotiate with Lenders

During the Coronavirus pandemic, lenders may be more willing to make accommodations for you by developing payment plans or pursuing other arrangements to better manage your debt. One way to negotiate is to ask the lender for a lower interest rate. If you have a track record of making payments on time, you have a good chance of the lender granting this request. You can also negotiate a repayment plan with your lender. There are two types of repayment plans –forbearance agreements and long-term repayment plans. The difference between the two types is that a forbearance agreement creates a set period of time in which you do not have to make payments, but interest will still accrue. A long-term repayment plan typically lets you pay back your debt with reduced or no interest. https://www.equifax.com/personal/education/covid-19/negotiate-debt-with-lenders/ 

Some Key Questions to Ask Your Lender

• What relief programs are available?
• Are there fees associated with any of these programs?
• Will interest continue to accrue during this relief period?
• How long does the relief period last? 
• When will I need to start repaying?

After making an accommodation with your lender, you should check your credit reports to make sure that the accommodation is accurately reflected and that the lender didn’t report a delinquent or a missed payment. It may take about a month for the changes from your lender to show up on your credit report so it’s important to check your credit report regularly. https://www.experian.com/blogs/ask-experian/coronavirus-and-your-credit-report/ 

Consult with a Negotiation Lawyer

If you’re one of the many people suffering financial hardship due to COVID-19 and cannot pay your bills, it’s important to speak with a negotiation attorney as soon as possible. The negotiation lawyers at The Law Office of Ronald D. Weiss are here to help and offer free consultations to discuss ways to negotiate mortgage settlement to resolve your foreclosure situation among many other things to help you during these financially hard times.