What to do when you can’t pay your bills

The economic fallout from the coronavirus pandemic could be profound. Many people are already losing jobs, with unemployment jumping at a record pace. Even those who stay employed may face reduced hours or uncertainty about how long their paychecks will continue.

If you’re in a situation where you can’t pay all your bills, or likely to be there soon, you may have some options to limit the damage to your finances.

Prioritize essentials

Before paying anything else, try to cover the basics: shelter (mortgage or rent), food and utilities. Transportation, cell phone service and child care are necessities if they allow you to work.

The recently enacted stimulus package includes a 120-day ban on evictions for many renters, as well as a moratorium on foreclosures for most mortgages. People who have federally backed mortgages (including Fannie Mae, Freddie Mac, FHA, VA and Department of Agriculture) and who can attest to COVID-19-related financial hardship can request forbearance from their mortgage lenders. If you’re going to miss a mortgage payment, contact your lender about hardship options and consider talking to a housing counselor approved by the U.S. Department of Housing and Urban Development. You can call HUD at 888-995-4673 for round-theclock foreclosure avoidance assistance.

Housing counselors can help renters, as well. Another good resource is Just Shelter, which can point you to local organizations fighting eviction and homelessness. Also, emergency rental assistance may be available. Start your search for help at www.211.org.

Your local 211 organization can also connect you to resources to pay for other essentials, including food and utilities. Regulators in some states have told utilities not to shut off service for nonpayment during the crisis; elsewhere many utilities have vowed to suspend disconnections. Many also offer lower-cost “lifeline” service or payment plans if you fall behind.

If your car payments are too expensive and you owe less than the car is worth, you may be able to refinance the loan. Otherwise, the best option may be to sell it and buy something cheaper, if possible. If you owe more than the car’s value, you may still be able to sell it if you can get a personal loan to cover the difference in what you owe. Try to avoid repossession, either voluntary or otherwise, since you’ll still be on the hook for any deficit and your credit will suffer.