Financial Help for COVID-19

Bills are coming due for those who received financial “accommodations” during the COVID-19 crisis.

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When the coronavirus hit in March of 2020, governments and businesses scrambled to create programs that would soften the gut punch they knew COVID-19 would deliver to the U.S. economy.

Government handed out fistfuls of money; banks relaxed rules on foreclosure; credit card companies were flexible on late payments; and even the 44 million student loan borrowers got a break on interest payments.

For a while, anyway!

It’s a New Year, with a new president, but the coronavirus is still with us and the economy is still struggling to get back on its.

Some of the relief programs introduced in 2020 are still accommodating consumers in 2021, but not everyone is all in like they were last March.

Here’s a look at who’s still in and what you can expect from them.

Loans and Credit Card Relief for COVID-19

The Department of Housing and Urban Development extended its moratorium on evictions and foreclosures through Feb. 28, 2021. This applies to mortgages backed by the Federal Home Administration. Fannie Mae and Freddie Mac also extended foreclosure moratoriums through the end of January.

Banks and credit card companies have slowed down on payment assistance programs, most of which began in March of 2020.

Some banks allowed homeowners to miss mortgage payments for as long as 12 months, but that period is rapidly closing. Financial institutions make money when loans are paid back. That’s not happening in a lot of places.

An estimated 20% of homeowners missed at least one mortgage payment in 2020 and nearly half (46%) missed at least three payments since March.

» More about: COVID-19 Loans

Credit card companies, who usually make millions every month off late payment and over-the-limit fees, backed off penalizing their customers for most of 2020, allowing them to defer payments for two or three billing cycles.

That assistance appears to be going away at a lot of the major card companies. If your financial situation has crumbled because of the coronavirus, it’s best to call your card company or visit their website to see if any assistance still is available.

» More about: COVID-19 Credit Card Assistance

Other COVID-19 Relief Offerings from Private Businesses

The most often-repeated message from the big banks and credit card companies is for those negatively impacted by COVID-19 to stay home and use online or mobile app banking services to do their bill-paying and keep track of their accounts.

The second most-common message was: Call our customer service department for specific help with either personal or small business accounts. The sooner you contact a bank representative or your credit card company, the better.

Here is a rundown of the most impactful debt-relief options in the stimulus bill.

Federal Government Relief for COVID-19

Congress passed the $900 billion COVID-19 Relief Act in late December that more or less extended several of the programs introduced in the $3 trillion CARES Act that passed last March.

Some of the highlights of the December COVID-19 Relief Act include:

  • A second stimulus check. This time the amount was just $600 for individuals earning less than $75,000 and $1,200 for married couples making less than $150,000, plus an extra $500 for each dependent child under 17 years of age. President Joe Biden said he will introduce legislation to add to that amount after his inauguration. He could be talking between $1,400 and $2,000.
  • Unemployment benefits. The federal government will add $300 per week to whatever state benefits unemployed workers are receiving. That money will go out until March 15. The maximum weeks that unemployed workers can receive benefits was extended to 50.
  • Health and Human Service funding. Provides $73 billion to support Center for Disease Control to distribute vaccinations, especially in high-risk and underserved areas. Also, $22.5 billion of that goes to testing and contact tracing of the coronavirus.
  • Relief funds extension. The grant money sent to state and local governments in the CARES Act must be spent by Dec. 31, 2021.
  • Childcare help. Provides $10.25 billion for childhood and childcare providers, including $250 million for the Head Start program.
  • Payroll Tax Deferral. President Trump forced this on federal employees, but not many others accepted the break. Those who did must pay back the taxes subtracted from their weekly paycheck by Dec. 31, 2021. Originally, they were supposed to pay it back by April 30, 2021.
  • Paycheck Protection Program. Added $325 billion in relief to small businesses. Just over $284 billion of that goes to the Paycheck Protection Program. The max loan amount was reduced to $2 million.

$600 Coronavirus, COVID-19 Relief Checks

The second stimulus check of $600 that should be in most people’s hands by the end of January, was considered inadequate by everyone but Republican senators.

Now, that won’t matter.

Democrats have the majority in both the Senate and House of Representatives and President Joe Biden has proposals ready to up that amount quickly to $2,000.

Stay tuned on this one.

Unemployment Benefits

Federal unemployment benefits have virtually the same story as the stimulus check. The COVID-19 Relief Act passed in December provided $300 supplement to the weekly unemployment checks people receive from their state.

Not enough, says President Biden and the Democrats in Congress, who want the federal government to up that total to $400.

Stay tuned.

Waived 401(k) Penalties Modified

Workers can still take as much as $100,000 from their 401(k) account, but only if they live in an area that has been declared a major disaster.

The federal government waived the 10% early-withdrawal penalty for taking money from your 401(k) retirement fund as part of the CARES Act. That action was allowed if your finances were affected by the coronavirus. Now it has to be the result of a major disaster.

Paycheck Protection Program for Small Businesses

The Paycheck Protection Program received an additional $284 billion to make forgivable loans to small businesses for use to meet payroll. That includes $25 billion in funding specifically aimed at companies with a maximum of 10 employees.

Another winner here was the entertainment industry, which gets $15 billion to help independent movie theaters, music clubs and entertainment venues.

Nonprofits, local newspapers, TV and radio broadcasters were added to the list of eligible companies.

Hospitals and Health Care Centers Get Help

The Health and Human Services branch of the federal government received $73 billion as its share of the COVID-19 Relief Act.

The Centers for Disease Control ($8.75 billion for vaccinations), Administration for Children and Families ($10.25 billion for childcare); Public Health and Social Services Emergency Fund ($22.4 billion for coronavirus testing); National Institute of Health ($1.25 billion for research and clinical trials); and Substance Abuse and Mental Health Services Administration ($4.25 billion for mental health and substance abuse services) were the big winners here.

Student Loan Interest Resumes

The bad news is that the freeze on interest and monthly payments for 44 million student loan borrowers is over as of Jan. 31, 2021.

Interest charges and payments had been suspended since last March, but that gift is gone.

The good news is that President-elect Joe Biden has promised some sort of student loan relief/forgiveness and could push it through by Executive Order if Congress won’t agree to it as part of a bill.

What’s Next in COVID-19 Relief Options?

President-elect Joe Biden already unveiled a $1.9 trillion stimulus package, dubbed the American Rescue Plan, that will cover many of the same bases as the previous two stimulus packages, including a direct payment to taxpayers and families, plus increased unemployment benefits.

See the full story on Biden’s American Rescue Plan here.

Scammers Alert

The Federal Trade Commission has posted a warning that scammers are looking at panic-stricken consumers as easy prey for opportunities to take money or steal personal information.

Scammers could be using fake social media posts, texts or email posts that sound like news on treatments or information on where to make donations for relief funds and it’s all fake.

Here are the FTC’s warnings about scammers:

  • Don’t click on links from sources you don’t recognize
  • Ignore emails claiming to come from the Center for Disease Control
  • Avoid online offers for vaccinations or treatments
  • If someone is asking for donations in cash, gift cards or wiring money, stay away!
  • Beware of “investment opportunities” in any company claiming that says it can detect, prevent or cure coronavirus.

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at bfay@debt.org.

Sources:

  1. N.A. (2021, January 4) COVID-19 Economic Relief Bill. Retrieved from https://www.ncsl.org/ncsl-in-dc/publications-and-resources/covid-19-economic-relief-bill-stimulus.aspx
  2. Babich, L. (2020, November 6) 1 in 5 Homeowners Missing Mortgage Payments in 2020: How Should Agents Respond? Retrieved from https://www.realtrends.com/blog/1-in-5-homeowners-missing-mortgage-payments-in-2020-how-should-agents-respond
  3. Drew, J. (2020, December 27) COVID-19 relief bill addresses key PPP issues. Retrieved from https://www.journalofaccountancy.com/news/2020/dec/covid-19-relief-bill-addresses-key-ppp-issues.html
  4. Ladika, S., Mims, C. (2021, January 11) Credit card issuers offer cardholders relief amid coronavirus outbreak. Retrieved from https://www.creditcards.com/credit-card-news/credit-card-issuers-relief-coronavirus/