What to Do if You Can’t Pay Your Rent This Month

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By John Boitnott

The COVID-19 pandemic has inflicted unprecedented hardships on the American public. Besides the threat of a highly contagious, potentially deadly disease, the immediate draw-down and shuttering of whole industries as well as individual businesses have turned a once-thriving economy into a shambles.

Many Americans are finding themselves unemployed and burning through limited savings. Keeping a roof over your family’s head is a priority, but the end of the month looms and you’ve reached the end of your financial rope.

What happens if you can’t afford rent anymore?

In this guide, I’ll walk you through practical steps you can take now if you’re struggling to afford rent this month.

Step 1 - Know your own finances

This goes beyond being vaguely aware of income and expenses. Make sure you have a full and complete picture of your financial status.

For example:

  • What does your credit card debt look like?
  • Do you have student loan payments?
  • How much money do you have in savings?
You’ll want to assess everything from your checking and savings accounts, to 401(k)s, to life insurance, to those savings bonds that Aunt Betty gave you when you graduated college, but which have been sitting in a safe deposit box for more than a decade.

Next, ask yourself some other questions:

  • How are your taxes looking this year?
  • Could you qualify for a tax refund? Even if you didn’t file, the IRS has a non-filer tool where you can enter tax information in order to get a stimulus check if you haven’t already received one.
  • Are there assets you can sell for quick cash?
  • Are there any side hustles you could do?
  • Is there anything that can generate money that you can implement quickly to help you solve the problem in the short term?
  • Is there anything you can do to slow the outflow of money such as negotiate the waiving of late fees or deferring payments without penalty?
If your employer cut your hours or furloughed you, resulting in a significant pay cut, you may be able to qualify for unemployment benefits, or even take out a loan from your 401(k) if the plan your employer provides allows it.

Once your employment status returns to normal, you’ll have five years to pay the loan back through paycheck withholdings.

Step 2 - Know the details of your lease

The parts of a lease that most tenants are concerned with are how much the rent is, the security deposit, and whether the lease is for a specified period or month-to-month. But reviewing your lease carefully can actually help you in this particular situation.

Leases sometimes contain hardship clauses that allow you to break the lease before the term ends if a financial difficulty occurs.

This can let you find a more affordable place to live, or move in with family, which can make it easier to save money.

However, one consequence of this is it could affect the recommendation you’ll get from your landlord, so it’s important to keep the lines of communication open to minimize any potential hard feelings.

Step 3 - Communicate with your landlord

Landlords are human beings with bills to pay, too. They have been affected by the pandemic along with everyone else. Often they will work with you if you make a concerted effort to keep them informed of your situation as soon as possible.

The important thing to remember is that being honest and up-front will increase the chances of a landlord being willing to work with you if your financial situation takes a turn for the worst.

If you’ve been a good tenant with an otherwise good payment history, your landlord may not want to lose a solid renter and may be willing to work out a payment plan that can be a win-win for both of you.

Providing your landlord with documentation of your hardship such as a letter from your employer, pay stubs, documentation of filing for unemployment, or the like can show that you are doing your best and acting in good faith.

Make sure anything agreed on between you and your landlord is confirmed in writing.

Communicating with your landlord could also prevent a missed rent payment from being reported to a credit bureau. Most landlords don’t report to a credit bureau unless payments have been missed repeatedly. Rent is one of the few payments that a person makes that doesn’t positively affect his or her credit score, but it can adversely affect it if payments are missed.

Even if you have gone through an eviction, if you’ve maintained an open line of communication with your landlord, your credit score can still come out unscathed as eviction judgements are no longer included as part of your credit history.

Step 4 - Take advantage of government resources

Both the federal and state governments offer information and programs that can help you during this time. Navigating government resources can be a daunting task, so here are some that are specifically geared toward those facing financial difficulty due to the COVID-19 pandemic.

The federal moratorium on evictions

The moratorium on evictions can protect you from being evicted through December 31, 2020. It was instituted not only to prevent people from being homeless, but also to prevent the unnecessary movement of people to prevent the spread of COVID-19.

To qualify, each individual on the lease must certify, under penalty of perjury, to the following, according to the Federal Register:

  • You've tried your best to get government help for paying your rent;
  • You won't earn more than $99,000 for this year (for couples that file, it’s $198,000);
  • You're doing your best to make payments;
  • You can't pay rent because you’re low on cash, you need financial assistance, lost your job, or have medical bills;
  • Homelessness has become possible, or you might need to go into shared, close quarters were you to be evicted;
  • You know that you are still responsible to make rent; and
  • You’ve learned that after the order ends on December 31, your landlord can ask for rent arrears and evict you if you cannot make those payments.
The form can be found on the CDC’s website.

Other resources

You can find many other resources at the state, county, and local level that offer support to individuals needing housing assistance.

The National Low-Income Housing Coalition has an interactive map connected to a searchable database that can help find organizations that can provide rental assistance in your area.

It also has a helpful and sortable Google doc that is regularly updated with new information. The Google doc has more detailed information as to what programs were recently added and which programs have closed.

The Department of Housing and Urban Development also has resources specifically for renters available on its website.

The site includes:

  • Publications on how to talk with your landlord
  • Information about the CARES Act
  • Information on how to contact a housing counselor at HUD’s Disaster Response Network
Do you run a small business out of your apartment?

Even the smallest of small businesses could be eligible for an Small Business Association (SBA) loan. The SBA offers everything from bridge loans to Payroll Protection Plan (PPP) assistance to other emergency funds for those who have experienced sudden loss of revenue.

For Self customers, SpringFour is a one-stop shop for assistance with finding rental resources, employment assistance, food savings, health insurance, and many other resources.

Just enter your zip code and answer some basic questions to get in touch with the help you need to weather this storm.

Step 5 - Know your rights as a tenant

The rights of a tenant and the rights of a landlord vary widely from state to state.

It’s important to know the laws that specify those rights and obligations for residential tenants because those laws have a significant bearing on what a landlord is and isn’t allowed to do with respect to your housing situation.

It’s far more complex than just being able to evict if the rent isn’t paid.

A great example of this is New York City where things like rent control, the Housing Court system, and the state of New York’s rent moratorium, which was just recently extended, emphasize the importance of knowing what remedies are available to you as a tenant.

Final step - Don’t quit

As demoralizing as the situation is, and as clichéd as this sounds, we are all in this together.

Many others like you are also going through hardships—some of them quite serious. Don’t restrict yourself to a single source of potential assistance. Look to multiple resources, including government programs, family, friends, local organizations, churches, non-profits, and charitable groups.

Take advantage of every resource available to you.

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About the author

John Boitnott is a longtime digital media consultant and journalist who covers technology trends, startups, entrepreneurship and personal finance for Inc, Entrepreneur, Business Insider, USA Today and other major publications.

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Written on October 20, 2020
Self is a venture-backed startup that helps people build credit and savings. Comments? Questions? Send us a note at hello@self.inc.

Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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