Dealing With Debt Caused By the COVID-19 Pandemic

In addition to the risk of health complications or even death due to the coronavirus, the COVID-19 pandemic has also caused financial challenges for many individuals throughout the country. If you are now dealing with debt that was accumulated during the ongoing COVID-19 pandemic, you are not alone. While you may be feeling overwhelmed and anxious about your future, there are options for managing your debt available, and resources out there that can help. To learn more about dealing with debt caused by the COVID-19 pandemic, contact us today and we can help you reach out to an experienced Mississippi Bankruptcy Attorney to schedule a consultation.

You’re Not Alone – Many Are Suffering With Pandemic Induced Debt

According to BankRate and reported on by CNBC News, 42 percent of Americans have increased their credit card debt since the beginning of the COVID-19 pandemic. Of those who have experienced an increase in debt, nearly 50 percent say that the increase was directly caused by the pandemic. Many people who were laid off as a result of business closures and economic worries did not have enough savings to comfortably support themselves and their families, resulting in people falling behind on payments and turning to credit to pay for basic necessities.

Dealing with Debt: Resources and Tips

If you are dealing with debt, the first thing that you should do is take the time to figure out exactly how much debt you have and the source of that debt. For some people, it may be credit card debt; for others, they may be behind on mortgage or student loan payments. Once you know what type of debt you have, you’ll be better able to navigate the resources available and strategies for managing that debt.

  • Student loans. The majority of federal loans (not private student loans) are currently paused and interest is waived. The Biden Administration has extended the student loan pause until January 31, 2022. 
  • Mortgage payments. If you have a federally backed loan, you may be eligible for a COVID hardship forbearance if you have experienced financial hardship as a result of the COVID-19 pandemic. The Federal Housing Financial Agency (FHFA) has also extended foreclosure moratoriumsthrough the end of the year.
  • Credit card debt and personal loans. You’ll need to talk to your creditor/lender directly regarding options that may exist for you if you have fallen behind on your payments. Most large credit card companies, including companies like Chase and Wells Fargo, have announced assistance programs, including collection forbearance. Many banks and credit unions are also offering deferred payment options.
  • While several states have passed laws placing a moratorium on utility shut-offs, the current landscape in Gulf Coast states is not as friendly. In Mississippi, the law on suspending disconnections expired in May; however, in Alabama, utilities have continued to suspend disconnections for non-paying customers on a voluntary basis. If you are unable to pay your utilities, you should connect with your utility provider to discuss your options as soon as possible.

The above provides information that is specific to debt type; the following provides some general advice for dealing with debt during the COVID-19 pandemic:

  • Talk to your lenders/creditors. If you are falling behind on payments and are experiencing large amounts of debt, talking to your lenders/creditors directly is always a good idea. Even without state or federal legal protections in place, your lender/creditor may be able to defer payments or otherwise provide assistance.
  • Know your rights. Even without a moratorium on debt collection, creditors must still follow debt collection practices established by the Fair Debt Collection Practices Act. A debtor is legally prohibited from using unfair practices to collect debt.
  • Reach out to a credit counselor. When you are feeling overwhelmed with debt and aren’t sure what your options are, a credit counselor is a great source of information. A credit counselor can help you to get your finances in order and create a plan for managing your debt, which is empowering.
  • Connect with a bankruptcy attorney. In some cases, a person may be experiencing such a large amount of debt that filing for bankruptcy is the best financial option. If you have exhausted your other options for debt management, you should contact a bankruptcy attorney to discuss the next steps.

When you need help with debt management and bankruptcy is an option on the table, you need the advice and guidance of a legal professional. We can help you connect with an experienced Mississippi Bankruptcy Attorney. Gulf Coast Bankruptcy Attorney is dedicated to providing information to people struggling financially so that they can make informed decisions about their financial future.