Important Consumer Credit Protections To Be Aware Of During the COVID-19 Crisis
COVID-19 is not only a public health crisis, but a financial crisis as well. Because of the restrictions being enacted by the governors and mayors of numerous states and cities, a vast number of people have been laid off, furloughed or lost income from their businesses. In Pennsylvania alone, three million new people applied for unemployment benefits this past week alone.
Much has been made about relief from the federal government, which is substantial and includes: direct compensation up to $1200 per person, increase in unemployment benefits by up to $600 per week, expansion of employees rights to take family and medical leave for the care a family member and for child care, and a mandate for paid sick leave to those who have fallen ill from the virus. There are also less discussed measures being taken to protect consumers in connection with their credit so that the crisis does not leave financially strapped consumers with ruined credit or collection actions against them. I have outlined some of the major consumer protection relief measures that you should know about here:
Mortgages
Consumers with federally insured mortgages (which is virtually all mortgages) may obtain a forbearance or a loan modification if they are suffering from financial hardship caused by COVID-19. In addition, these government agencies have instructed all mortgage servicing companies to suspend reporting any delinquency or negative credit information to credit bureaus on account of any forbearance or loan modification that the consumer received.
Foreclosures
Foreclosure sales for federally insured mortgages have been suspended for 60 days. Additionally, many states have enacted moratoriums on the filing or prosecution of foreclosing proceedings in state court. On May 7, 2020, Pennsylvania’s governor Tom Wolf formally stayed the progression of all foreclosure proceedings in Pennsylvania for 60 days through July 10, 2020. Check what your specific state or city has done to halt the foreclosure process or if you are in danger of having a foreclosure action initiated against you.
Student Loans
The Department of Education has instructed all its servicers to reduce interest rates on federally insured student loans to 0% for two months and to grant forbearance for two months to anyone who requests one. If your student loans are already past due, the forbearance should be instituted automatically.
Other Bank Loans
The government agencies that regulate banks and credit unions have advised that loan modifications can be granted to any borrower due to hardship caused by COVID-19. These agencies have likewise advised lenders that they do not need to report accounts as delinquent to to credit bureaus when the loan modification was on account of COVID-19.
Evictions
Many states have enacted moratoriums on the filing or prosecution of eviction proceedings in state court. In Pennsylvania, evictions proceedings have recently been stayed through July 10, 2020. In New Jersey, all eviction (and foreclosure) actions are stayed until two months after the governor lifts the state of emergency. In Delaware, there is also a moratorium on litigation or prosecution of evictions (and foreclosures) until the governor lifts the state of emergency. Check on what your specific state or city has done to halt the foreclosure process or if you are in danger of eviction.
Utility Bills
Many utility providers have voluntarily agreed to suspend all disconnections of utility services during the crisis and will reconnect your service if you have been disconnected. In the Philadelphia region, PECO and PGW have also agree to suspend all late fees through May if you are unable to make payments during the crisis. Virtually all telecom providers, including AT&T, Verizon, T-Mobile, Sprint & Comcast, have confirmed they will not terminate service during the crisis and will waive all late fees if the inability to pay is caused by COVID-19.
If your finances have been affected by COVID-19, take advantage of the concessions that banks and utilities are offering you right now so your credit is not ripped apart by this crisis. Call your mortgage or student loan servicer immediately and apply for a forebearance so your credit score is not affected and your are not sent to collection. Advise your utility providers of your circumstances so you do not accrue late fees or also end up in collections.
In addition to taking these affirmative steps to protect your credit, you should be vigilant of organizations who aren’t giving you the relief you deserve or are trying to take advantage of you. These bad acts could include:
Refusing to grant you a forbearance on your mortgage, student loan or other loans.
Reporting your loans as delinquent to the credit bureaus.
Sending your account to collections.
Proceeding with activities to foreclose against you or evict you.
Charge you late fees.
Disconnect your utility services.
If you are experiencing any of these problems with your bank, servicers, utility company or a debt collector, get help from a consumer protection attorney. Your credit should not suffer from financial sacrifices we are all making to end this crisis.
This post was updated on May 7, 2020.
Greg Gorski is a consumer rights attorney in Philadelphia and founder of Gorski Law. He represents consumers in Pennsylvania, New Jersey and nationally. If you have a problem like the ones described above, Gorski Law may be able to help. An initial consultation at Gorski Law is always free. Call 215-330-2100 or email to schedule a consultation. We look forward to hearing from you.