I recently came across an article on NPR.org. The article, ‘Incredibly Scary’: Single Moms Fear Falling Through Holes In Pandemic Safety Net, tells the story on several single mothers. While each of their stories are different, there is one general theme. That is – single moms are hit hard by COVID-19.

The women in the article are not alone. Far too many single moms are struggling to pay their bills. In addition to worrying about the health of their child, they face extreme financial hardship. This is true for single moms who still have jobs as well as those now unemployed due to the pandemic. They are not sure how they will make rent or mortgage payments, car payments, childcare payments, and so on. I totally sympathize with these women. It is extremely hard being the sole caretaker and breadwinner in normal times. I cannot imagine the additional hardship during this pandemic with remote schooling and other changes to our daily lives.

What to do?

As a bankruptcy lawyer, I would tell some of these women that they should eliminate all unnecessary expenses and create a budget.  I know this seems like a simple idea. However, you may find there are things that you can do without until an improvement of your situation. If Congress gets their act together, you may soon receive additional unemployment benefits and/or stimulus money.  Here’s hoping that help is on the way.

Mortgage Forbearances and Deferments

Mortgage forbearances and deferments are still helping those who own their own homes and evictions remain, at least for now, stayed in New Jersey.  These measures are helping to keep housing stabilized.  Don’t get caught short though!  Make sure you have a written agreement with your lender so the terms are regarding what you can expect when the government protections are lifted.  Are you going to get time to catch up?  Will your payments be added to the back of the loan? On the mortgage side of this crisis, many people have been told by their lenders to “wait and see” what terms will be offered.  This can be unnerving, and it is certainly unreliable.

One thing we can say, is that all indications are that the mortgage lending industry does not want to see another crash like 2008, so long-term repayment deals to keep loans active are likely to be coming.

Additionally, you made be able to work with your creditors to negotiate payments or payment plans.  For example, the IRS typically will allow a taxpayer a long-term low interest repayment plan, if the taxpayer does not have the means to pay off their tax debt right away.  There is also the possibility of an “Offer-In-Compromise,” if you have access to cash or an asset to sell and pay-off the IRS with a reduced lump sum.  On the other hand, if you have credit card debt, you may want to just pay the minimums and not stress over it too much.

Budgets

Budgeting is important and so is prioritizing.  Our view is simple, make a list of the debts you have that are related to essential living expenses, such as the roof over your head, food, utilities, transportation, and insurance.  Look at those expenses critically and see if any of them can be reduced but remember they cannot be ignored.  Next, list debts that cannot be forgiven, such as taxes and your rent or mortgage arears, and make a plan for repaying those.  Do you best not to touch any retirement savings!

Finally, there are the general unsecured debts.  These are credit cards, medical bills, personal loans, and things of that nature.  Sometimes they are very hard to ignore and the thought of making just the minimum payments is maddening because the interest is so high.  But these are the bills that can be forgiven if they can’t be resolved.  So, breathe and give it time.  These are the “wait and see” bills.  If you can make the minimums to keep the phone from ringing, that’s great.  But don’t let them scare you with their calls and demands.

These are trying times for all but single moms are hit hard by COVID-19.  The most important this is to be realistic about your situation, not fatalistic.  I know it seems impossible to believe right now, but this too shall pass! Please call me if you need any help or have any questions.

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