Amid the ongoing effects of the COVID-19 pandemic, individuals and families alike have seen their personal finances plummet and bills pile up. Lack of work, reduced hours, and problems finding childcare are just some of the reasons that bills across the nation have gone unpaid. If you are one of the countless Philadelphians struggling to make ends meet during the pandemic, you may be wondering how to prioritize your payments.
- Should I pay my mortgage or rent?
- Should I pay my car payment over my credit card payment?
- Or should I pay my credit cards before paying for rent since there is a moratorium?
Knowing how to spend your limited funds can be difficult to do. Here is some guidance on how Americans are currently handling bill payments during the pandemic.
Where Americans are Putting Their Money
Research is showing that mortgage payments have been at the top of the list of bills that are consistently paid regardless of financial problems. While mortgage moratoriums prevented foreclosures, many Americans still worked to stay on top of their payments, even if it meant neglecting other bills. Second in line were car payments. The last of the three top paid bills during the pandemic are credit card payments – which saw individuals rolling over a balance that is past due only 1.95% of the time.
Why is This the Case?
Mostly, bill payments remained in an order of importance similar to that before the pandemic with only a few changes. In the past, car loans have often come out ahead of mortgage payments or credit card debt. What changed? The pandemic kept more people in their homes, making the house the center of their work, childcare, and children’s school. Simply put, the home has become more valuable than ever before and ensured that people continued to keep up with their mortgage payments.
Certain mortgage forbearance programs have also made it easier for people to stay on top of their bills and ensure that the house is protected before anything else. But with moratoriums and forbearance programs coming to a close in June, even those who have stayed on top of their bills may find it difficult to continue to make their payments without that safety net.
What Should You Do?
With bills piling up, it can be difficult to understand exactly what should be paid first. Depending on your income, you may find that covering your mortgage, car payments, and credit card bills is impossible. You will need to plan carefully and take advantage of all hardship programs to catch back up on your important payments.
However, if you have been trying to catch up on payments but are still in thousands of dollars of debt with no foreseeable end in sight – there is a better option. Individuals are finding that bankruptcy is the best way to regain their financial footing while reducing their monthly expenses. While a bankruptcy may not be your first course of action with the numerous relief programs out there, it may be your best and most comprehensive option. Before using your limited money to pay for one bill while the others continue to spin out of control, you should consider talking to an experienced local bankruptcy lawyer to discover if you may be able to forgo those monthly payments completely.
In many cases, someone just finds themselves unlucky and received an unexpected bill or reduction in working hours, which then snowballed into an inability to cover one’s monthly payments. Pandemic and over a year of economical hardships then quickly added up to $20,000+ in back rent or mortgage payments, additional credit card bills due to increased food costs, and other increased costs.
If you find yourself in this situation, which thousands of Americans are currently facing – there is help and there is a way out. A bankruptcy attorney can advise you on how to reduce your monthly payment from thousands of dollars to a few hundred through a Chapter 13 bankruptcy or help you wipe your debt completely through a Chapter 7 bankruptcy.
Contact Our Offices
Our team of attorneys understands how the pandemic has impacted our local community. Sadek Bankruptcy Law Offices Law is here to advocate for you and help hurting families to get their finances back on track and looking toward a better tomorrow. We can help you understand the best way to organize your bills and ensure you can retain your way of life. We can also help you discover if you would be a good candidate for a Chapter 13 or Chapter 7 bankruptcy.
The COVID-19 pandemic has been difficult. If you feel like you are struggling to keep ahead of your finances, we understand.
At Sadek Bankruptcy Law Offices we understand the stress your situation may cause, therefore phone calls are promptly returned by our lawyers and professional staff. To schedule a free and confidential consultation with a lawyer regarding your legal matter please call our law office at (215) 545-0008. Contact us today to learn the best ways to break free from debt and experience financial freedom.