06 Apr Establishing Payment Priorities When Your Income is in Limbo
When income falls, it is necessary to decide which bills to pay based on priority. Essential bills include:
- Maintaining health and life insurance policies and funding essential medications
- Covering housing and utility bills
- Addressing student loan payments, auto loans, and credit card debt
Economists view the recently passed 2 trillion dollar relief package as economic damage control. Many expect the need for another round of assistance if the shutdown remains in place beyond April. The hope is that between the $1,200 relief payments, expanded unemployment benefits, and incentives for small businesses to keep paying employees will temporarily stop the bleeding. In the meantime, health care officials must work to contain the deadly pandemic.
What is unknown is the length of time it will take to get the economy back on track. This uncertainty leads to controlling spending and the process of deciding what bills you can afford to pay in the coming months.
Should you Maintain Health Insurance Coverage?
The coronavirus created both a healthcare and an economic crisis. Going without health insurance could lead to financial hardship. The CARES Act requires qualified health plans to meet minimum coverage limits, including testing, without co-pays, cost-sharing, or prior approval for services.
If you lost your job, verify if coverage remains because a job loss could also mean the termination of coverage.
Those without insurance might qualify to purchase a COBRA policy through your employer or one through the Healthcare Marketplace. Both options require you to pay the premiums, although a Marketplace Plan could offer subsidies that lower out-of-pocket costs for premiums. Health Sherpa provides a tool to compare plan prices and enroll in a Marketplace health insurance plan.
How Will You Pay for Medications?
Facing a reduced income could put medication costs out of reach. Patient assistance programs can help through discount cards, co-pay cards, and rebates to trim the price of staying healthy.
Should You Maintain Life Insurance?
While the vast majority of individuals who become ill from the coronavirus recover, it is more contagious and deadly than the flu, making life insurance essential protection against a worst-case scenario.
Is There Help for Housing Payments?
The recent CARES ACT offers mortgage relief for homeowners with federally backed mortgages like Fannie Mae, Freddie Mac, and VA Loans. The provisions call for a forbearance of up to 12 months on qualified loans. However, you must have a plan in place to catch-up payments after the payment suspension ends.
Renters also received eviction relief through state moratoriums but not payment suspensions.
Is There Help for Utilities?
Like mortgage payments, a moratorium on utility shut-offs does not forgive payments. It only delays the amount due. Foregoing utility bills could lead to large balances when the crisis ends.
What Help Can I Get for Student Loan Debt?
The Department of Education approved payment waivers for 60 days and the elimination of interest. You must contact your loan servicer to activate the benefit. If you continue to struggle financially, you can convert a qualified loan to an income-based repayment plan to lower payments.
Falling behind on student loans is always a bad idea because the government has vast resources to collect, including garnishing wages, tax refunds, and social security checks.
What Help Is Available for Auto Loan Debt?
Getting behind on your car loan will result in a repossession. Although some cities have moratoriums on repossessions, there are no policies to suspend payments. If you are unable to make a car payment contact your lender to explore available options.
Can I Get Help for Unsecured Loans and Credit Card Debt?
Failing to pay credit card debt will hurt your credit but will not result in the loss of your home or vehicle. Due to the large scale of the economic crisis because of the pandemic, companies are working with borrowers to waive fees and extend payments during the crisis.
While you want to pay all your debts on time when your income disappears, it can be impossible to stay on top of the amounts owed. Prioritizing payments based on need and importance can help you allocate the remaining income to the most essential bills.
About Titan Consulting Group
Titan Consulting Group helps consumers evaluate various debt relief options and choose the right program that best fits their short-term and long-term financial goals. We work with consumers seeking debt consolidation loans, or who may be considering options like debt negotiation or bankruptcy. Through our network of partners, we can help you find the right solution to reach your goals and get back to living a life free from high interest credit card debt.
Contact us today at (888) 488-4517 or Apply Online now.