Date: April 23, 2020Author: Denbeaux & Denbeaux
New Jersey is one of the coronavirus hotspots in the United States. It comes as no surprise that we lead the nation when it comes to discussions about testing, social distancing, and money.
As the stimulus checks arrive many people will want to catch up on bills and make payments that are overdue.
In an interview with personal finance Guru Suze Orman she said there are two things that you must do with your money during the pandemic.
First she recommends not to pay off your credit cards in full. Anybody that knows Suze Orman knows the number one thing that she does suggest it’s always pay down credit card debt.
The reason she’s saying not to pay down two credit cards is that credit card companies began decreasing people’s credit limit back in 2008 when the Great Recession hit. She thinks it’s going to happen again. You may even get calls to close down your card all together. A strategy right now is to call the credit card companies and ask if they can give you a 0% interest rate or lower your interest rate she says to try it.
So if you get that stimulus payment or unemployment check, whatever you do keep your eye on your credit and continue to make the payments if you can and see if you can get a 0% interest rate for the longest. In case you do get sick from coronavirus or lose your job there will be something to fall back on .
Second thing she says to do is to not make extra payments on the mortgage. Again this is something new for Suze Orman because she generally recommends that people make an extra payment every single month. Now she’s encouraging people to save as much cash as possible.
It is a good idea to contact everyone that payments are currently being made to ask for a postponement. As an attorney here are some facts based on experience related to personal finance that my clients have run into.
In some cases you may have accounts put into collection by debt collectors. I remind everyone that there is something called the fair debt collection practices act, FDCPA, and there are laws still in effect that control how people may contact you with regard to collecting a third party debt. So don’t automatically assume that when you get a phone call about a debt that it is valid. You have to go through the steps to make sure that is valid. You can read more about this here.
This is especially important when it comes to the stimulus payments that may be hitting your bank account, hopefully soon. These funds are exempt from debt collectors. Debt collectors are known to garnish, and freeze bank accounts. If this happens get in touch with me as soon as possible. I can help you.
It is important to contact all of your creditors to let them know that you need to postpone payments. However having done that does not mean that they will postpone payments. This is especially true of mortgage servicing. One way of postponing payments on a home loan is to request a forbearance.
If you’re going to take an FHA forbearance please take a moment and read my post about the FHA forbearance and things you need to look out for here.
If you’re not taking the FHA forbearance because your home loan is not eligible for a FHA forbearance, please make sure to contact your bank and either request a forbearance otherwise they will be expecting monthly payments to continue.
Most people are unaware that Governor Murphy has negotiated with mortgage servicers for private mortgage loans to agree to allow consumers to take a forbearance. Information about these programs can be found here.
If you can’t make the monthly payment, and have not taken the forbearance, late fees and credit injury will accrue. By the third missed payment you will be at risk for foreclosure and will receive a notice of intent to foreclose by the third month. Please read my post what to do when you receive a notice of intent to foreclose, here.
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