As a victim of a disaster, you are hit with the devastating realities of finding shelter, food and transportation, as well as dealing with time lost from work, school and much more. As a result, figuring out how to pay your bills probably isn’t a priority.
However, your financial obligations do not stop because you lost your home, car or income. Your creditors expect payment to be made on time and for the agreed-upon amount – unless you contact them.
When Mother Nature threatens you and your ability to pay bills, communication is key!
The creditors, lenders and agencies that report your information to TransUnion®, Equifax® and Experian® are aware of “special reporting” for those who have been adversely impacted by a natural disaster – so be sure to let them know your situation as soon as you are out of harm’s way.
Lenders have the option of adding a special comment, or using a special disaster code, to indicate your account has been affected by a natural or declared disaster. In some cases, they may be able to arrange for deferred payment. This means your payment history is protected from reflecting missed payments if you make good on the new deferred payment schedule.
In the aftermath of a natural disaster, it’s easy to get overwhelmed.
Take steps to protect your credit while you’re rebuilding your life:
1. Get your most recent credit reports and scores.
A disaster can trigger a wave a financial hardship that may cause your credit scores to take a dive. Having a copy of your reports and scores before the disaster hit your credit will help you make the case to potential lenders, landlords, etc., that your recent low scores are due to the disaster – and are not a record of delinquency.
2. Pay what you can as quickly as you can.
When disaster hits, it’s crucial to prioritize who gets paid and when, especially if your ability to work and earn wages is interrupted. Your mortgage/rent and insurance should be first on your list. After those, see how much of what you have left from your income and savings can be used to pay your other creditors something (at least a partial payment) during this difficult financial time. Most creditors will try to find a way to work with you. The important thing is to make the calls before your next payments are due.
3. Contact your creditors to explain the situation.
Ask what documentation is needed from you and request that the special designation be placed on your affected accounts. Depending on the severity of the disaster, you should contact your creditor with updates. If your income is interrupted and you don’t think you will be able to pay your credit cards or other loans, be sure to contact your lenders as soon as possible. Explain your situation and when you think you will be able to resume normal payments.
4. Document conversations and get written confirmation.
Keep a detailed record of conversations with your creditors. Make note of who you talked to, their title, when the conversation took place – and what was advised, promised and/or agreed to. Have them document the conversation on their end by making notes in your file – and email you with confirmation of all the details.
NOTE: If a creditor agrees to a major change to the credit agreement, such as a three-month suspension of payments, get it in writing!
5. Add a Consumer Statement to your credit reports.
You can add a 100-word statement to explain how a natural disaster has disrupted your life and may hamper your ability to make payments in the short term. While this won’t protect your scores, it will make creditors aware of your situation and may help with future lending decisions.
Because it can take weeks to access the damage and months, or even years, to recover from a disaster, it’s important to check your credit scores regularly – and monitor your credit reports for changes.