The current public health crisis is causing financial distress for many New Yorkers. NYLAG recognizes that many New Yorkers are struggling with a sudden reduction in income in addition to uncertainty about how long this situation will last. Even during this uncertain time, financial obligations continue. Therefore, it is of the utmost importance to prioritize your expenses.
Here’s what you should know:
Whether you pay rent or a mortgage, no legal action can be taken against you to evict you or foreclose on your home during this emergency. However, these bills are still owed. Even if your landlord or mortgage lender cannot take any action to begin a foreclosure action or eviction right now, when the courts reopen, they can begin legal proceedings. At that point, you will have to make up the payments you missed.
Housing should be considered your highest priority expense. If possible, you should continue paying your rent or mortgage every month. If you are unable to continue to pay your housing expenses, you should speak to your lender about negotiating an alternative arrangement. Be aware that you will need to make up these payments later.
Currently, your utilities (electricity, gas, and water) cannot be shut off due to nonpayment. Many utility providers, including ConEd, will negotiate a deferred payment plan.
While utility payments are a priority, you should reach out to your provider to see if you can negotiate a lower monthly payment or a level billing plan.
However, if you have an outstanding balance that remains unpaid when the ban on shutoffs is lifted, you may be subject to a utility shutoff at that point.
Federal Student Loans:
If you have a Direct Loan or a Federal Family Education Loan (FFEL) loan that is held by the Department of Education, all payments are suspended until September 30, 2020. (This does not apply to other types of federal loans including Perkins Loans, and FFEL loans held by commercial lenders.) While payments are suspended, no interest will accrue. Also, the period of time during which payments are suspended will count toward Public Service Loan Forgiveness.
All collection of student loans, including wage garnishment and tax refund offsets, are also suspended during this time.
This means that student loan payments are NOT considered a priority at this time.
More information about relief available to student loan borrowers is available here: https://www.studentloanborrowerassistance.org/what-the-cares-act-means-for-repayment-of-federal-student-loans/
However, once the payment suspension is lifted, your federal loans should resume their status as a priority expense. If you have questions about how to make your loan payment affordable, contact NYLAG to set up an appointment with a financial counselor.
Private Student Loans:
Private student loan payments are not suspended during the public health emergency. However, private student loans should be considered a lower priority expense, because private student lenders have fewer remedies to collect money from you if you can’t pay.
However, many lenders may be willing to offer a reduced payment or forbear payments during the public health crisis. Contact your lender.
Credit Cards are unsecured debts, which means they should be considered your lowest priority expense. Credit cards and other unsecured debts are limited in the steps they can take to collect from you.
Reach out to your lender; many banks may be willing to defer payments or waive later fees or penalties. However, if you still cannot pay, credit card lenders cannot cut off essential services or seize any of your funds without first taking you to court.