What should furloughed workers do if they can’t pay their rent and mortgage?

The US government begins notifying federal employees that a shutdown may be imminent

Others, those whose work hours depend on spending by tourists or people on federal payrolls, such as hospitality and restaurant workers, will be affected. Unlike federal employees, they are not guaranteed back pay.

Missed work hours or even loss of pay can create a crisis for workers who are already living on the edge.

If a government shutdown creates difficulties, Here’s one thing you can do: ask for help.

People often retreat and do not communicate when faced with a crisis. But if you know you’ll struggle financially due to a shutdown, help may be just a phone call away.

A Federal Worker Shutdown Survival Guide

Stay in constant contact with your landlord. This may seem obvious, yet many renters don’t go this route when they’re in a financial bind.

You may have an unforgiving or merciful landlord. But you’ll never know unless you call.

Here are some Options for lifting During your call:

• Request an extension.
• I suggest making a partial payment. Your lease may state that rent is due in full. But shutdowns are out of your control, so see if you can negotiate to pay what you can. If you can keep up with some rent, that’s less than you’ll owe Later. This may not be appropriate for a company, but it may be appropriate for a sole proprietor.
• If you paid a security deposit, ask your landlord if that money can be used to pay rent. You can make a deal to replace the security deposit once your financial situation improves.
• Request a payment plan for missed rent.
• Ask for relief from late fees and fines. If the shutdown doesn’t last long, you may be able to make a late payment. Given the situation, at least see if your landlord will attach any penalties for late payments.

If you can make a deal with your landlord, make sure you get it in writing so there are no misunderstandings later.

What is affected by the government shutdown and how it could affect you

Contact your mortgage loan servicer

Contact the company that manages your mortgage. Explain your condition.

In the past, lenders have provided a wide range of assistance to workers affected by the shutdown.

One option is to ask for patience. The debt is not forgiven, but forbearance allows a borrower who is experiencing financial hardship to stop making payments.

Make sure you get information about tolerances in writing.

And don’t worry about the forbearance affecting your credit history.

Once a loan enters forbearance, the lender temporarily suspends the required payments. An account reported as being in forbearance is not viewed as a negative indicator by the FICO scoring model.

In anticipation of the closing, some lenders are already stepping up to help borrowers.

PenFed Credit Union announced it will offer… Emergency leave relief assistanceincluding an interest-free loan in the amount of the customer’s net pay for members with direct deposit.

Likewise, Federal Savings Bank USAA said members who work for an affected federal agency and potentially experience a pay cut may also be… righteous Apply for a one-time interest-free loan equivalent to the amount of one net paycheck, up to a maximum of $6,000.

Marine Federal Credit Union offers a Paycheck Assistance ProgramIt also provides an advance – up to $6,000 – to eligible members affected by the closure. This program is available to all active duty service members, federal government employees, and contractors who are paid directly by the government and have direct deposit set up in their Navy accounts.

Navy Federal has provided similar assistance in previous shutdowns, including providing loans to nearly 20,000 members during the 2018-2019 funding period.

If the worst happens and the lockout lasts long enough that you miss several mortgage payments, here are some other options you can explore with your lender to see if you qualify.

• Loan modification. This will change the terms of your loan, and perhaps even lower your monthly payment. Or your loan could be recalculated and the arrears added to the loan balance, which could cause your monthly payments to rise.
• Payment plan. You will be allowed to spread out your late payments. Repayments will be added to your existing mortgage balance.
• Loan extension. Your overdue balance will be added to the back of your loan. Late payments will effectively extend the term of your loan.

What to do if a federal government shutdown stops your paycheck

Contact your credit card company

Asking to skip a payment may be difficult, but it’s better than risking a late payment.

For affected members, USAA is waiving minimum credit card payments for three months, although interest will continue to accrue. Deferrals are also being offered on consumer loan payments, and for checking or savings account holders, no overdraft fees will be charged.

The biggest credit score killer is skew. Your payment history accounts for 35 percent of your FICO score, which is the credit model most used by lenders.

FICO scores generally range from 300 to a maximum of 850. FICO also creates industry-specific scores, which can range from 250 to 900.

A recent late payment can do more damage to your credit score — more so than it did years ago, according to FICO.

Here’s something you may not realize. The higher your credit score, the greater the impact of late payments, according to Ethan Dornhelm, vice president of predictive scores and analytics at FICO.

A newly reported 30-day late payment can lower a consumer’s FICO score by more than 100 points, depending on a person’s credit file. People with original credit may experience the biggest drop from a 30-day delinquency, Dornhelm said.

The impact of a thirty-day delinquency is likely to be more modest for consumers who already have poor credit, because their lower scores already reflect riskier behavior of missing payments.

Requesting and receiving a payment break can avoid affecting your credit.

If you are having difficulty, please call and see what help is available. The more the better.

If you want more timeless personal finance advice, order your copy of Michelle Singletary’s Money Milestones.