Getting Behind With Covid-19
Because of the shutdown and the loss of employment that came with it, more and more people have found themselves months behind on their bills. Luckily, creditors understand this and are more willing than ever to work with you. Even given that though, catching up is not going to be easy.
If you have fallen behind, it will take some time to get caught back up, don’t expect to get it done overnight. We do have some tips for you though. Tips that can help speed up your recovery process.
1) Prioritize Your Bills
Not all bills are created equally, so get them together and organize them by type, due date and time past due. Once you have them organized, you can begin prioritizing them.
If the bill is for a utility or housing, this obviously moves it up to the top of the line. Next up would be bills for assets that could potentially be repossessed such as your vehicle. Finally, bills such as credit cards would usually bring up the rear since, while they could negatively affect your credit, you do not need them to live.
Another thing to consider is the amount of time that the bill is past due. If you have one that has already gone delinquent and one that is current, for example, you have a choice. If you can only pay one, your best option might be to keep the one current to avoid another strike on your credit.
Only you can judge the importance of each bill, but you should make sure that you have food and shelter first and then look to protect your credit as much as possible.
2) Stay In Communication
You need to stay in communication with your creditors. If you are not in contact with them, they are far more likely to send your account to collections where you could incur more fees and more headaches.
During Covid-19 many creditors are more willing or even required to work with their customers more. Getting an extension on an auto loan for 30000 dollars is often no more than a click away and virtually automatic.
Other creditors are willing to work with you because they know that everyone has it tough and if they work with you, once you have money, you will start paying again. The last thing that they would want is to run a hard line with everyone and then not be able to collect on debt when money gets better for people.
3) Cut Expenses As Much As Possible
If you really want to get caught up in a hurry, you need to cut any unnecessary expenses from your budget.
Start with things that you do not need like gym memberships, cable television and any other subscription services that you can do without.
For your other bills, try to lower them as much as possible which might be easier than you think. Scrutinize your food budget, shop for cheaper insurance and even look for cheaper providers for things like electricity and internet.
Even the tightest budget usually has some area that can be improved upon. Money that can be cut and then used to catch up on bills.
4) Be Prepared To Make Deals
Many creditors may be willing to make you deals on past debts that have gone into default. This is especially true if they have already gone into collections. If you have a debt of 500 dollars, offer to get them 250 dollars and work from there.
Be prepared to haggle a bit and come up with an offer that you can afford to pay. Make sure that the deal releases you of any further liability and get it all in writing.
5) Make As Much Money As Possible
This one should be obvious but try to think if you are doing everything possible to earn money. There are some companies that are still actively hiring and would hire you almost immediately. Almost any business related to the delivery and grocery industry is actively hiring and even paying higher than normal rates.
In addition, look for other ways to make some money on the side. Sell some of the property that you do not need and even take surveys online. Surveys are not worth much but an extra 40 or 50 bucks a month could come in handy.
6) Stay The Course
Above all else, keep faith and stay the course. Stick to your plan and just keep moving forward and you can get through this. Yes, your credit may take some hits but it will recover. And, who knows, you might just come out of this a better budgeter with a drive to finally establish a worthy emergency savings and retirement account.