The next few weeks mark the beginning of serious financial uncertainty for millions of people, because a slew of debt, from income tax payments to several months of rent, are going to be due at the same time.
“It is going to be a perfect storm of financial difficulty for many, many people,” said Andrea Bopp Stark, an attorney at the National Consumer Law Center (NCLC).
The center recommends three steps for anyone that finds themselves in a financially difficult situation regarding debt.
Step one: create a list of priority bills and debt to pay off.
“People are going to be barraged with debt collectors calling and trying to get them to pay on a medical debt or a credit card debt, but those debts are less important,” said Stark. “Pay debts that if you didn’t pay them it would cause immediate harm to your family.”
Those are things like your rent and a car payment, especially if you need your car to go to work.
“If you have a judgment against you, a court judgment against you for a debt, it is important to try and make a payment plan to pay that because creditor could issue a garnishment against your wages,” Stark added.
Step two: contact your lender to make a payment plan on those priority debts.
“We are seeing data come in that there are people who are delinquent and don’t have a forbearance agreement when they could very easily be in a forbearance agreement,” Stark added. “I know wait times on the phone are horrible right now, but you have to be persistent and get through and find out what help is available.”
Data collected by the U.S. Census shows that delinquency rates are higher in communities of color.
“It is mostly Black and Latinx borrowers who are not getting these forbearance agreements,” said Stark. “Whether they don’t know about it or nobody is reaching out to them to let them know this is available, we don’t know why but that is a population that is going to be disparately impacted and has already been disparately impacted by this whole crisis.”
Step three: find a way to stick to your prioritized debt list.
“It may sound obvious but if you have it on paper and you have created a budget, stick that to the refrigerator or wherever, then you know these are the priority spending items,” said Stark. “If your son or daughter say, ‘Oh, I want this or that,' ‘no, look at the fridge these are our priority spending items, sorry.’”
Because every situation may not be solved in three steps, the NCLC has now made its in-depth guide to Surviving Debt available for free. It has template letters to send to debt collectors and hundreds of pages of help to get you through this tough time.