First Things First: The Basics
This page links to resources that can give you information on how to deal with common types of debt. However, there are a few things you should always keep in mind:
- Keep track of your spending: Know where your money goes and what you get for it.
- Communicate with creditors early: If you think you will miss a bill, many service providers and lenders will work with you.
- Prioritize bills: If you know that you cannot pay all of your bills, figure out which are the most important and focus on paying those. If possible, work out a deal with the service provider to help preserve your credit rating.
- Apply for benefits: The earlier you apply for unemployment, food assistance, housing assistance, etc., the earlier you can get help. If you have lost income due to COVID-19, don't wait. Apply now.
- Be patient but persistent: Many government agencies, utilities, lenders, and other service providers are overwhelmed right now. You may have trouble contacting them. Don't be discouraged and don't get angry. Keep calling, emailing, and trying to communicate until you have resolved your issue.
- Don't panic: Panic can lead to bad decisions. Don't let stress lead you to fall for a scam, make a unhelpful purchases, or cave in to unscrupulous debt collectors.
Surviving Debt: Expert Advice for Getting Out of Financial Trouble
The National Consumer Law Center has made their Surviving Debt guide available for free due to COVID-19. This guide provides expert advice on a wide range of consumer debt, including:
- How to prioritize debts
- Talking to creditors
- Collection actions
- Credit cards
- Student loans
- Medical bills
The guide is written and organized to make it easy to find the information you need. You can view the guide at https://library.nclc.org/sd/0102.
Consumer Finance Protection Bureau
Utilities and Internet
On December 4, 2020, the U.S. Department of Education announced that all federal student loans would continue to be placed under administrative forbearance through January 2021. Loan repayments will begin after January 31, 2021, unless Congress enacts additional legislation.
On March 27, 2020, Congress passed the CARES Act, which provided student loan borrowers relief from paying their student loan debts, among other things. Under the CARES Act, the U.S. Department of Education suspended student loan payments, stopped collections on defaulted loans, and set interest rates to 0% for a period of 60 days. On August 8, 2020, President Trump had directed the Secretary of Education to continue this relief through December 31, 2020. All federal student loans were automatically placed under administrative forbearance through January 2021.
*Note that the administrative forbearance under the CARES Act does not apply to private loans. Contact your loan servicer for information on private student loans.
Texas RioGrande Legal Aid has published an FAQ on COVID-19: Student Loan Relief.
Also see the NCLC Surviving Debt Guide: Chapter 13.
General Medical Debt: See the NCLC Surviving Debt Guide: Chapters 11.
Surprise Medical Billing: Lone Star Legal Aid wrote this article on what to do if your medical bills turn out to be more than you were expecting: National Consumer Protection, Part 2: Surprise Medical Billing.
Lender and Service Provider Programs
The credit monitoring company Experian has put together this list of lenders and service providers who may be able to work with customers on debt: COVID-19 (Coronavirus) Credit Card and Debt Relief.
Debt Collection and Garnishment
No new garnishments for consumer debt can begin until May 26, 2020. Also, no hearing on requests for default judgments in consumer debt cases will be scheduled until May 18. (Note that fraud-related cases may still take place if necessary.) Read the order here.
See the NCLC Surviving Debt Guide: Chapter 14.
Being Judgment Proof
Depending on where you live, you may be able to get information, counseling, and even representation for your tax debt. Contact the following organizations to see if they provide services in your area and how to qualify:
Please note these are not tax preparation services.
- Lone Star Legal Aid Low - Income Tax Clinic (East Texas): See how to apply here.
- Texas RioGrande Legal Aid - Texas Taxpayers Assistance Project (Southwest Texas): See how to apply here.
- Legal Aid of NorthWest Test - Low Income Tax Clinic (Northwest Texas): See how to apply here.
- Texas Tech University School of Law Tax Clinic (Panhandle Area): To apply, call 806-742-4312.
- Texas A&M University School of Law - Low Income Tax Clinic (Ask about service area): To apply, call 817-212-4123.
- South Texas College of Law Tax Clinic (Houston) - To apply, call 713-646-2990.
See also the NCLC Surviving Debt Guide: Chapters 19 and 23.
See these resources for small business help.
Credit Rating Protections
The CARES Act offers some credit rating protections for those who work out a deal with a lender due to COVID-19 hardship:
- If you are current on payments and get an accommodation, your will show that you remain current until the accommodation ends.
- If you are delinquent and get an accommodation, your will show that you remain at the same level of delinquency until you catch up on payments or the accommodation ends. For example, if you are 30 days late and your lender gives you a forbearance, your will show you as 30 days late until you catch up or forbearance ends.
- If you are behind on payments but catch up during your accommodation period, then your should update to reflect your account status as current.
Note that these protections do not apply to charged off loans. Credit cards are charged off after 180 days of nonpayment. Most other loans are charged off after 120 days.
Also, credit reporting companies are not yet sure how they will implement the CARES Act rules. Be sure to check youroften to make sure that it is accurate. Transunion, Experian, and Equifax will all provide free weekly credit reports through April 2021. If there is something wrong with in your credit report, you can dispute it with the report provider.
For more information about forbearance and credit reporting under the CARES Act, see Enforcing the CARES Act Credit Reporting Protections from the National Consumer Law Center.