What to Do if You Can't Afford Next Month's Rent

As eviction moratoriums and additional unemployment benefits run out, one in three Americans are not sure they can pay their rent.

The coronavirus pandemic and ensuing recession continue to take their toll on the nation's health and economy. Life may be starting to return to normal in many states, but unemployment is still at record highs. According to the Census Bureau's Household Pulse survey at the end of July, 1 in 3 Americans had either no or slight confidence they could pay next month's rent. It's hardly surprising.

The federal moratorium on evictions and the additional $600 in CARES unemployment benefits have expired. And there's no clarity on when a second stimulus package might be agreed upon, or what will be in it. That said, the Centers for Disease Control and Prevention (CDC) has just announced a nationwide moratorium on evictions for certain renters.

If you aren't sure how to pay October's rent, you are not alone. Here are some steps to take:

1. Get a clear picture of your finances

First things first: There's no point in asking for help or speaking to your landlord until you know exactly what you can or can't afford. If you've put off looking at the numbers, it's time to sit down and make a list of your monthly expenses.

Once you have a clear idea of how much you spend, reach out to the companies you need to pay. Many of them, including banks, lenders, and utility companies, are willing to work with customers in these unprecedented times. Some may allow you to temporarily reduce or defer your payments without incurring late fees.

2. Find out if you are federally protected

If your landlord has a mortgage owned by Fannie Mae or Freddie Mac, you may be protected. It's a bit complicated because it depends on what entity backs your landlord's mortgage -- and whether your landlord is receiving mortgage assistance.

Visit Fannie Mae and Freddie Mac's websites to find out you live in a property backed by one of them, and see what support either organization can offer. Reach out to a HUD-certified counselor to fully understand your options and any protections that apply.

The CDC has also issued an emergency order to protect struggling renters up until the end of the year. Renters need to meet certain conditions -- such as having lost a significant part of their income and be making partial rent payments.

3. Talk to your landlord

If you know you won't be able to pay your rent, the sooner you speak to your landlord, the better. Your landlord may need that money to cover bills -- including mortgage payments -- and will need time to manage the situation. Explain how COVID-19 has impacted your income, and ask whether you can negotiate a repayment plan.

Your landlord may allow you to make a partial or delayed rent payment, especially if you are a good tenant with a track record of paying on time. You may need to sign an agreement committing to pay the rest by a certain date.

4. Look for assistance

Until a second stimulus package agreement is reached, renters having trouble covering bills are reliant on individual housing assistance programs in their states. Some states, like Colorado, California, and Michigan, have announced emergency funds to help renters.

• Contact your local housing authority and call 2-1-1 for more information.
• The National Low Income Housing Coalition has an interactive map of rental assistance throughout the country.
• Apply for unemployment and any other benefits you might be entitled to.
• Follow local news and watch for announcements from local authorities. That way, if anyone announces a grant program you might be eligible for, you can be first in line.

In case worse comes to worst, find out whether there are eviction protections in your state. Unfortunately, many of the state eviction moratoriums introduced at the start of the pandemic have expired. So if you face eviction, get free legal advice as soon as possible. Stanford Law School and The Pew Charitable Trust have pulled together details of state-by-state eviction protections and legal resources.

5. Consider a low-interest loan

Taking on any debt, especially in these uncertain times, is not a decision to take lightly. But if you have exhausted other options, it might be better than missing a rent payment. If your credit score is strong enough to qualify for a low-interest personal loan, you might be able to borrow enough to tide you over. Some loans are specifically designed for borrowers with bad credit, but you will have to pay a higher interest rate.

If you go this route, make sure you can afford the monthly payments -- even if it means stretching the loan term out for longer. Find out what fees you will pay so that there aren't any nasty surprises, and shop around to find the best deal.

This too shall pass

When the novel coronavirus first began to impact our lives in March, few imagined we'd still be dealing with the fallout in September and beyond. But we have to hold on to the fact that some semblance of normality will return.

These steps should help you stave off immediate crisis. But they are only temporary solutions: You will have to pay your rent eventually. In the longer term, you may need to consider downsizing to a cheaper home, or even getting a roommate to share the costs. For now, try to keep up with payments the best you can and keep a roof over your head.