Exactly what to say if you can’t pay your bills

Exactly what to say if you can't pay your bills

With more than 38 million Americans currently out of work due to the coronavirus shutdowns, millions are having difficulty paying their bills on time.

The first thing many financial experts have advised is to talk to your landlord, creditors or bank about your financial situation to see if they can offer any leniency or a payment plan. That sounds easy enough — unless you don’t know what to say or what to ask for. 

Here are five scripts that can provide clarity on what to say to your creditors. 

1. Rent

Eviction moratoriums are in place in much of the country, but you should still be proactive if you are unable to pay all or part of your rent. The Consumer Financial Protection Bureau, as well as housing experts, says to contact your landlord as soon as possible to try to work something out together. 

You should contact your landlord in writing since you will want to have documentation of your attempts and your eventual agreement.

If you are asking for a reduced payment, here’s an example of what to say, according to Kelley Long, financial planner and member of the American Institute of CPAs’ Consumer Financial Education Advocates. You can substitute in your personal financial situation and figures.

Hi landlord, as you probably know, I’m off work right now. Will you accept $500 this month rather than the typical $1,000?

Detailing exactly how you plan to pay them back when you get a job or are back on better financial footing is also a good idea. It shows you are acting in good faith, says Long.

2. Mortgage

If you have a federally-backed mortgage and wish to request forbearance under the CARES Act, then you need to call your mortgage servicer and explain that your financial hardship is related to the Covid-19 pandemic, the CFPB says. Your servicer’s website should have a list of documents and information you’ll need to request the forbearance.

The CFPB suggests having a list of questions ready to ask, including:

  1. Can my payments be temporarily reduced or suspended?
  2. How do you decide if someone’s payments can be reduced or suspended, and for how long?
  3. What fees are involved?
  4. What are the repayment plan options when the forbearance period is over?
  5. Will I be charged interest during the forbearance?

If you have a private loan, you can still call your servicer and ask the same questions. Many banks and other financial institutions have put Covid-19-related financial hardship plans into place.

If you can’t get a forbearance, another potential option for homeowners is to contact your bank and see if you can apply for any financial hardship loans, which can help you make your mortgage payments. When you call, ask if they have any coronavirus-related financial hardship plans in place.

Be sure to take notes throughout your phone calls and ask the mortgage representative to send you a written agreement so that you have everything documented.

3. Credit cards

Most credit card companies are currently offering financial hardship programs related to the coronavirus pandemic. Here’s a list of what some credit card companies and banks are offering. To figure out what yours offers, call your credit card company or go to their website for the most up-to-date information. 

If you call the company, the “magic word” to use is accommodation, says John Ulzheimer, credit expert and president of the Ulzheimer Group in Atlanta. You can say: I have lost my job due to the coronavirus, and will not be able to pay my full bill this month. Can you offer me a coronavirus accommodation?

“An accommodation is basically an agreement whereby they will grant you some sort of relief, and ‘relief’ is pretty vague,” says Ulzheimer. It applies to any change in your consumer payment agreement with your credit card issuer due to Covid-19. Your credit card issuer will determine what the accommodation will be, but it could include late fee waivers, a lower interest rate or the ability to skip a payment or two without any interest charged. 

Thanks to the CARES Act, this accommodation should be in place for 120 days after the coronavirus state of emergency is officially over, assuming you live up to your end of the agreement. During this time, your creditors will report your payments as “current” to the credit bureaus, meaning your score won’t be impacted.

4. Student loans

If you have federal loans, you don’t have to do anything to defer your payments — the Department of Education automatically suspended all payments and interest through the end of September.

It’s a bit different for those with private student loans, but you do have options, Travis Hornsby, founder of Student Loan Planner, tells CNBC Make It. Nine states and Washington D.C. recently came to agreements with student loan companies to offer borrowers 90-day forbearances due to Covid-19, and the companies are expanding those offers to other states as well, Hornsby says.

He recommends contacting your servicer and requesting “the 90-day Covid forbearance.”

If your lender does not offer the 90-day Covid forbearance, ask for the general hardship forbearance. Interest will still accrue, but given the relatively low interest rates on student loans compared to other types of financial products, like credit cards or payday loans, that will probably make the most sense if you are really struggling.

5. Car payment

Unlike with other missed payments, auto lenders can repossess your vehicle as soon as you miss a payment in many states. That could be as soon as the very next day.

That said, most lenders will give you a grace period, especially now. You’ll want to contact them as soon as you think you might have difficulty paying. “You may be able to negotiate a delay in your payment or a revised schedule of payments,” says the Federal Trade Commission. “If you can reach an agreement to change your original contract, get it in writing to avoid questions later.”

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