Don’t Let Debt Get You Down

AUG 17, 2020 |

Don’t Let Debt Get You Down 

The COVID-19 pandemic has changed the way we live, play and work. Many people are facing a reduction in income or job loss all altogether. 

If you’re struggling to stay current with monthly bills, it’s important you don’t let things slide. Ignoring your financial obligations now can have a long term effect on your financial wellness. Navigator Credit Union has some advice on how to manage debt during these challenging times. 

Contact your lender before missing a payment

If you think you may fall behind on payments for your mortgage, auto loan, credit card, student loan or other debt, call your lender and explain your situation. Credit card companies and other lenders may offer hardship programs. These programs may include the option to temporarily delay or adjust some payments. In some cases, you may be allowed to avoid interest charges. In order to be part of these programs, you must reach out to your lender proactively. 

When contacting your lenders, be prepared to explain:

·      Your financial and employment situation

·      How much you can afford to pay

·      When you’re likely to be able to restart regular payments

·      Be prepared to discuss your income, expenses and assets. 

Debt relief options
When researching debt relief options, make sure that you understand how the program works and potential risks of enrolling in it. There are many companies and organizations that advertise that they can help you find "debt relief” by simplifying or reducing your debt, "consolidating” your debt or negotiating your debt. However, the actual programs offered can differ quite a lot. 

You should make sure you understand whether the company is offering:

·      A consolidation loan

·      Credit counseling

·      Debt settlement

·      Or another alternative. 

Consider all of your options, including refinancing through balance transfers or loans, working with a nonprofit credit counselor and negotiating directly with the lender or debt collector yourself. 

Be wary of scams
Scammers seek to take advantage of consumers who are in distress. If the program seems too "good to be true,” it’s likely a scam. Avoid any debt relief or settlement organization that:

·      Charges any fees before settling your debts. Upfront fees are a major red flag for debt relief services, unless it’s a non-               profit credit counseling program entering you into a program like a debt management plan;

·      Claims that it will help you take advantage of "new government programs;"

·      Makes guarantees just to make your debt go away;

·      Doesn’t explain the consequences of entering the program;

·      Won’t send you free information about services without requiring you to provide personal financial information. 

Check your credit reports

As you are managing your debt, it’s important to check your credit reports. The three major credit reporting agencies – Experian, TransUnion and Equifax – are allowing you to check your reports weekly through April 2021 for free at AnnualCreditReport.com. 

If you sign-up for a credit card relief package and are meeting the terms of that relief package, such as making a lower minimum payment, the company must report to the credit reporting agencies that you are "current” on the account. However, if you were already behind on your payments at the time you receive relief, the lender is not required to report that you are current. If you find an error, you should dispute it immediately.

While it may seem easier to let bills pile up during times of financial difficulty, taking a proactive approach to managing debt is the wisest thing to do – and in the long run it could save you money and help preserve your credit score. Navigator Members experiencing financial hardship as a result of the coronavirus pandemic can contact the Credit Union for confidential personal assistance. Members can also apply for a special emergency relief loan in amounts up to $1,500 with terms up to 15 months, based on lending criteria. Details are available at navigatorcu.org/community-strong.  

About Navigator Credit Union

Navigator Credit Union has been guiding the Gulf Coast as a not-for-profit credit union since 1939. We are committed to working in the best interest of our Members and communities as we deal with the COVID-19 crisis. We can provide you with a full range of financial products and services, with better rates, fewer fees and more flexibility than most traditional banks. Learn more at navigatorcu.org/community-strong.

 


 logo