The Consumer Financial Protection Bureau has launched a joint website with the Department of Housing and Urban Development and the Federal Housing Finance Agency to be a central repository of information on housing relief options for consumers and scams to … Continue reading →
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For one Iowa woman, the most frustrating and scary time of her life started when her debit card was declined. In the days leading up to St. Patrick’s day, health care worker Adunni Noibi felt sick. Yet when the mother … Continue reading →
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CompareCards Report Finds 3 in 10 Cardholders Are Using Credit Cards “More Than Ever” One in four American credit cardholders said they’ve involuntarily had their credit limit slashed on at least one of their credit cards or even had a … Continue reading →
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CFPB headquarters. (Source: Shutterstock) On Monday, the CFPB announced it will increase the transaction threshold for its updated final rule on remittances. According to a statement by the CFPB, the Remittance Rule “allows certain banks and credit unions to continue … Continue reading →
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Nearly one-third of Americans were unable to pay their rent during the first week of April. The most likely culprit — the coronavirus. As the pandemic swept the nation, many businesses were forced to close their doors, leaving millions unemployed. With no income, many found they were unable to make their rent payments. This month, some renters may be facing the same predicament again.
If you find yourself in a similar situation and are struggling with financial uncertainty, there are a few things you can do to help make ends meet until stay-at-home orders lift.
1. Talk to Your Landlord
Many renters are panicked about making rent payments in April and the coming months. If you find yourself in a similar situation, talk to your landlord about it. Most property owners will be willing to work out a payment plan with you as long as you approach them with honesty and urgency. If you wait until the day before rent is due to speak with them, they may not be so willing to work with you.
If your landlord is unwilling to compromise or consider a payment plan, try to pay as much of your rent as possible. Plus, your landlord might waive late fees if you pay a partial amount. While skipping one payment may not result in eviction, missing several could eventually trigger action, even in states that temporarily halted the process in March.
2. Reach Out to Utility Companies
Many utility companies may also be willing to cut renters some slack during the pandemic. While some are waiving late fees, others are easing shutoffs to accommodate those who don’t have money to pay their bills right now. However, you must call them first with a request. Otherwise, they’ll expect you to pay in full by the due date.
Additionally, some companies are offering free services to those struggling to pay their utilities. This way, people still have internet access, running water, gas and electricity even if their providers shut off services. Comcast, AT&T, Pacific Gas and Electric Company, and Georgia Power are just a few companies giving renters a break in some form or another.
3. Cut Nonessential Costs
As you take stock of bills you must pay and others that may be able to wait, examine your budget as a whole. Are there any costs that you could cut temporarily? Doing so may make it easier to buy groceries and pay essential bills.
Review your recent credit card statements to see how much you actually spend throughout the month. Odds are you could cut ordering out, an online subscription or two, or a membership you’re not using at the moment. Considering your spending habits will help you save so you can pay your bills.
4. Use Emergency Savings
If you’ve exhausted the above options and still cannot find the money to pay bills or buy essentials, you may have to dip into your emergency savings. While using your savings to survive a pandemic may not be how you envisioned spending your money, this is an emergency, after all.
Financial advisors often recommend you have enough money in your emergency fund to pay for six months of living expenses. However, this isn’t an option for everyone. Therefore, it’s best to assess your budget, costs and savings and create a plan that works for you. Even a few hundred dollars may be enough to keep you on your feet until this blows over and people can return to work.
5. Seek Financial Assistance
More than 26 million Americans have filed for unemployment over the last few months. By now, you may have done the same if you are currently unemployed due to the pandemic. In most cases, you can receive unemployment benefits up to half of your wages. However, each state sets its own criteria and benefit levels.
If you aren’t eligible for unemployment and are still struggling financially, you might seek assistance from friends and family or from a personal loan. This may help you pay for essentials or keep your housing and utilities running during the crisis. However, it’s recommended you speak with a certified counselor to sort through your options and make guided financial decisions that won’t hurt you in the long run.
Plan Ahead for Financial Uncertainty
Unexpected emergencies like this are why it’s so important to plan ahead and save. As you recover, be sure to create an emergency fund or build yours back up so you’re ready if disaster strikes again.
The post What Renters Can Do in Response to Financial Uncertainty appeared first on NFCC.
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MADISON, Wis. (AP) — When her doorbell rang on Sunday night, March 29, Blanche Jordan was just starting a new Game of Thrones puzzle on her living room floor. Jordan, 39, is a breast-cancer survivor who is taking social distancing … Continue reading →
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Question: At what point does it make sense to declare bankruptcy?
Dear Reader,
The general consensus is to declare bankruptcy as a last resort, only after you’ve exhausted all other debt relief options. Yet, sometimes it is hard to know when you’ve run out of options.
Your options boil down to your overall financial situation, including your income, debts, and assets. To get a better idea where you stand, start by assessing your situation with a determination of your net worth and how much you owe. To calculate your net worth, add up all of your liquid assets, any retirement funds, real estate, and any investments that you may have. Next, tally your overall debt by adding up how much you owe for each credit card and loan. After you have the totals for each category, compare them. If you owe more than what you own and your income is not enough to meet your financial obligations, bankruptcy may be a solution.
Yet, it may not be your only one. You may be able to repay much of what you owe through a debt management plan, debt consolidation, or even settling your accounts for less than the full balance. And if you have a home, you may have options to modify your mortgage and keep your property in the long run. If you are unsure of your options, reach out to a NFCC certified credit counselor for guidance. A credit counselor can review your situation in depth and help you figure out the pros and cons of your options, including bankruptcy.
If you decide to move forward with bankruptcy, work with an attorney to guide you through the legal process. For personal bankruptcy, you could either file Chapter 7 or Chapter 13. Chapter 7 works best for people with overwhelming credit card and few assets. In this case, your assets are sold to pay off the creditors. If you have a home or other property that you want to keep, Chapter 13 may be a better option. Chapter 13 bankruptcy allows you to pay off your creditors through a payment plan in three to five years without losing your assets. But if you miss your court-arranged payments, you may lose the assets you are trying to protect.
When it comes to repaying your debts there isn’t a one-size-fits-all type of solution. Bankruptcy may seem very scary and can severely damage your credit, but in certain circumstances, it is the right choice to clear your debt and rebuild your finances. With time, the negative consequences of bankruptcy fade away, and you will be able to rebuild your credit. You don’t have to make this decision alone, talk to a professional and evaluate your options. Good luck!
The post When Does It Make Sense to Declare Bankruptcy? appeared first on NFCC.
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Question: I have two debts I owe, each for about $200.One is a phone bill and the other from a water service company. Both debts have been sold to a collection agency. Should I pay both? One gave me an offer settle for less and they will clear it, but should I do that or should I pay in full? Will it help fix my credit or not? I just read not to give a collection agency any of my bank info. What kind of proof of payment should I get and what is the best method to pay?
Dear Reader,
Paying your debts in full is always the best way to go if you have the money. The debts won’t just go away, and collectors can be very persistent trying to collect those debts. Before you make any payments, you need to verify that your debts and debt collectors are legitimate. You should ask both collection agencies for a written debt validation. Under the Fair Debt Collection Practices Act, you are granted protections against collectors, so it’s important that you keep track of your communications with the collectors in writing. Under the law, the collection agency has to verify your debt within 30 days. This letter should include information about the original debt. If the collector fails to provide you with this verification, they can’t legally collect that debt or report it to the credit bureaus. If they validate the debt, then you should plan your repayment strategy.
If you want to accept the collector’s offer and settle for less instead of the full amount, get the offer in writing and make sure it clearly states their commitment to remove the collection account from your credit reports as soon as the debt is settled. It’s a good idea to ask collectors to include a “pay for delete” incentive when you are paying off a debt because it can help you boost your credit score as soon as the account is removed. Collectors are not required to agree to it, and many don’t even offer it, but it’s worth a try. If you are settling your debt, at least try to get them to report your debt as “paid in full” rather than “settled for less than the full balance.” Having your collections listed as paid in full in your credit report is more favorable than having your debts paid for a fraction of what you owed. So, in your case, if the collector is offering to remove the debt with a partial payment, settling the debt should not have a negative effect on your credit.
When it comes to making your payment, your best options are cashier checks or money orders. As a general rule, it is a safe decision not to share your banking or debit card information with collectors. Providing that information leaves you potentially vulnerable to having additional funds withdrawn with little notice, either by mistake or intentionally. Whatever form of payment you choose, make sure you can keep track of it. After you pay, check your credit reports to verify that the collectors have upheld your agreement. Your credit report is updated monthly, so make sure you give yourself enough time. Until April of 2021, you can get free copies of your credit reports once a week at Annualcreditreport.com. Beyond that, your credit reports will be available once every 12 months at no cost.
Paying your debts in full is a great way to begin rebuilding your credit, and you should see an increase in your score over time if you practice healthy financial habits. However, how that journey plays out depends largely on your current credit history. If you want to focus on learning how to rebuild your credit, don’t hesitate to look for help. There are plenty of resources online, and if you would like a more personalized approach, you can always talk to a certified credit counselor from a nonprofit agency over the phone or online. Good luck!
Sincerely,
Bruce McClary, Vice President of Communications
Bruce McClary is the Vice President of Communications for the National Foundation for Credit Counseling® (NFCC®). Based in Washington, D.C., he provides marketing and media relations support for the NFCC and its member agencies serving all 50 states and Puerto Rico. Bruce is considered a subject matter expert and interfaces with the national media, serving as a primary representative for the organization. He has been a featured financial expert for the nation’s top news outlets, including USA Today, MSNBC, NBC News, The New York Times, the Wall Street Journal, CNN, MarketWatch, Fox Business, and hundreds of local media outlets from coast to coast.
The post AskanExpert: Should I Pay Off a Debt in Collections and Will it Help My Credit? appeared first on NFCC.
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The numbers: U.S. consumer borrowing dropped sharply in March, according to Federal Reserve data released Thursday. Total consumer credit fell $12 billion, or at a 3.4% annual rate, in March, the first decline since August 2011. It follows a $19.9 … Continue reading →
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WASHINGTON (AP) — U.S. consumer borrowing fell in March for the first time in more than eight years, with the category covering credit cards dropping by the largest amount in over three decades, the Federal Reserve reported Thursday. The Fed’s … Continue reading →
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