Creditors offer relief for federal workers

Nationwide response may be unprecedented

Banks, utilities, telecom companies waiving late fees, providing loans

As 800,000 federal employees brace for another missed paycheck this week, banks, cellphone companies and nonprofit organizations are stepping up to help workers hurt by the month-long government shutdown.

Creditors from big banks to local credit unions and utility and telecom companies are offering forbearance, waiving late fees and providing shortterm, no-interest loans for affected workers. For many, it’s the first time they have rolled out a nationwide plan for a government shutdown.

“Not in my recollection has there been such a universal response,” said Bruce McClary, the spokesman for the National Foundation for Credit Counseling (NFCC), noting the efforts and timing are similar to those after major natural disasters.

“The only difference is this is a man-made disaster,” he said.

A countrywide effort ‘First time’ calling a creditor

Last week, the NFCC put out a national notice, telling those affected by the shutdown how to contact credit counselors who can help them put together an emergency budget, prepare for conversations with creditors and create a long-term recovery plan.

“It’s a landmark occurrence for the NFCC,” McClary said. “It’s the first time we responded with an emergency appeal for a government shutdown.”

Although it’s too early for hard figures, McClary reported counselors across the country are getting calls from furloughed workers.

At Ally Bank, the workers calling in are largely asking for a reprieve on their auto loans, said Diane Morais, president of consumer and commercial banking products.

At first, the bank included messages about shutdown assistance on customers’ online and mobile accounts. But as the shutdown dragged on, the bank expanded its message and released a nationwide alert explaining the specific types of help it’s offering, such as payment extensions, waivers for CD early-withdrawal penalties and refunds of non-sufficient fund fees.

“It’s not just if you’re a federal employee, it’s if you’ve been impacted,” Morais said.

Verizon implemented its “Promise to Pay” program, allowing federal employees and other affected workers to set a future date to pay their wireless or cellphone bill. Late fees and agent assistance fees are waived for as long as the shutdown lasts. The program typically is available to any customer experiencing hardship, but this is the first time the company announced it nationwide.

“The last thing people need to think about is paying a bill on time. We know how important it is to keep in touch with family,” said Mike Maiorana, senior vice president of the public sector at Verizon. “It’s a lifeline, not a luxury.”

Joel Rodriguez, a furloughed auditor at NASA who lives in Northern Virginia, has been proactively reaching out to creditors. His last paycheck on Dec. 28 paid his January mortgage and one of his car payments. But now other bills are coming due.

Last week, he called American Express to inform the company that his

charge card payment is coming but would be late. Rodriguez, who has been driving for Uber and Lyft and delivering through Postmates and Instacart for extra money, said the credit card issuer will waive any late fees. American Express confirmed it’s waiving late fees, returned-check fees and future interest charges as well as providing other assistance.

He also called Wells Fargo, his mortgage company. If the shutdown continues until his next payment’s due date on Feb. 1, the bank said he can skip the payment and tack it onto the end of his mortgage. Other options included paying a lower amount or just the interest. The bank won’t charge any late fees and won’t report the bill as late to the credit bureaus. Wells Fargo confirmed that it’s offering this type of assistance.

“I’m 43 years old, and this is my first time calling a creditor to let them know I cannot pay,” said Rodriguez, who is married with two small children. “I have good credit. If I go bad on my credit, I could lose my job.”

Uncertain future

Consumer advocates generally are pleased by the response from mainstream lenders and bigger banks and credit unions, especially during a time when workers are still paying off holiday spending or dealing with annual bills. “The turn of the year is a difficult time for workers to manage surprises and cash flow,” said Deborah Goldstein, director of federal policy and executive vice president at the Center for Responsible Lending. But she worries how forgiving lenders can be if the shutdown persists.

It doesn’t appear that a resolution to reopen the government is close.

“It’s one thing to miss one paycheck, but the shutdown is going on so long,,” Goldstein said. “It will be unknown territory for both the workers and lenders to navigate.”