HOW TO FREEZE YOUR BILLS DURING COVID-19

Photo courtesy of Mike Hayes

With a record 3.3. million people filing for unemployment benefits last week due to COVID-19, many Americans are facing unprecedented financial insecurity. During a time like this, wouldn’t it be nice to press pause on your bill payments for a few months? In anticipation of our current economic reality, Washington, D.C.-based software developer Michael Hayes recently did just that and negotiated to have his mortgage payment deferred for five months, credit card payments deferred for 3 months, and phone/cable bills deferred for 3 months. Read on to learn how he did it and for tips on how you can, too. 
 

THINK LIKE A CORPORATION

While experts believe that an economic recession due to coronavirus will be different than the Great Recession of 2008, the U.S. government’s approach to curing it is quite the same. Mike Hayes predicted that a government stimulus package favoring big corporations was imminent, so he learned from the last recession and took action. “I knew that these big corporations would be getting bailouts again, so I told myself, ‘Let me think like a corporation,’” Hayes said. “Let me get my own bailout.”
 

DEVELOP YOUR PLAN OF ACTION

While federal student loans have been suspended through September 30 due to The ‘Rona, most creditors and companies have not been as proactive in offering or advertising their debt relief programs. So that means that you will likely have to approach them directly with your requests. Hayes reviewed his monthly expenses and determined that relief from his mortgage, credit card, phone, and cable bills would be most beneficial for him during this time. That should also be your first step.

After reviewing which companies you want to approach, the next step is to go to their websites to see what, if any, debt/loan relief programs they are offering. Many will have information about their COVID-19 contingency plans on their homepage, and some will have already shared them via email.  

But be warned that most companies are offering the bare minimum, so you’ll have to determine for yourself what would be best for your finances and then present that to them directly. This is a “shoot for the moon to land amongst the stars” scenario, so think big and long-term. 
 

KNOW THE DIFFERENCE BETWEEN FORBEARANCE VS. DEFERMENT

When first approaching creditors and companies, Mike started by saying “I would like to speak to a manager regarding any contingency plans you have for the COVID-19 pandemic.”

Once you do get a chance to speak with a manager or decision maker, it’s important to know the difference between debt/loan forbearance and deferment. While they both temporarily postpone your payments, forbearance accrues interest, while deferment is generally 0% interest.

It’s like getting sleepy while watching a Netflix series. With forbearance, you fall asleep on Season 1, wake up in Season 6, and have Seasons 2-5 to catch up on. With deferment, you press pause at Season 1 and pick back up where you left off upon awakening.  Deferment is what you want. Here’s a more detailed explanation of forbearance vs. deferment.

BE PERSISTENT AND PREPARED TO WAIT

Most customer support representatives will not have the authority to make any decisions regarding your specific account, so be prepared for long wait times and multiple call backs. “You’ll have to be firm and persistent. It took me about a week and a half of calls,” Hayes said. “It should be easier now because of the stimulus package, but don’t let them throw that in your face. Even though some of us will be receiving those stimulus checks, the corporations will be receiving even more, and thus are in an even better position to offer you relief.”

For more COVID-19 money resources check these out these links:

Your Money: A Hub for Help During the Coronavirus Crisis(The New York Times)

If you've been financially impacted by the coronavirus, you may be able to pause payments on these 8 bills(Business Insider)

Federal Student Loan Payments will be Suspended through September 30 Due to the Coronavirus(BuzzFeed News)

Coronavirus auto loan payment and debt relief: What some auto lenders are doing to help(Credit Karma)