How to Stay Afloat Financially in the event of a Federal Shutdown

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How to stay afloat financially in the event of a Federal Shutdown
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Dec 21, 2022


Edited by Kathy Hinson Lead Assigning Editor Personal financial, credit scoring, financial management and debt Kathy Hinson leads the core personal finance team at NerdWallet. Prior to joining NerdWallet, she worked for 18 years working at The Oregonian in Portland in roles including copy desk chief and team leader for design and editing. Prior experience includes copy editing and news for several Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor's in mass communications and journalism at The University of Iowa.







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If you're facing a mountain of bills, but no income, address the essentials first. This includes your roof, medicine, food heating, electricity and -- for those who still must work even with a shutdown in the governmentgoing to work.
What's to wait for? Nearly everything else.
Communicating with creditors is key to surviving a government shutdown, and regaining your financial health after. Here's a guide to navigating the procedure if an official furlough is affecting your household.
How to deal with creditors
Missing one payments on a account -- such as a credit card, mortgage, auto loan or personal loan -- could knock as much as 100 points from your score and it could take years to fully recover. There are times when you can't avoid that, but it's worth asking lenders if they have programs to help you avoid credit score damage.
The first step is to visit the creditor's site or call the customer service line to find out if they have programs available for government workers who have been furloughed.
Then, if the lender does not have a furlough policy, inquire about the policies for accommodating short-term disruptions.
In the end, there is a decision to create . Make use of your social security safety net as well. Contact 211 or go to 211.org to connect with local assistance programs.

Here's what to know about specific types of accounts as well as some tips to cope with any disruption in income:
Credit cards
If you're able to make your minimum payment, do so, even if it's a little late. There's a chance you'll be charged a late charge If you pay the minimum payment within 30 days of the due date, your account will not be considered "delinquent" with credit reporting agencies. A delinquent payment damages your credit score -- and that's why it's the full minimum.
If you can't make a payment , but are in good standing, contact the card issuer to explain. Certain cards will extend the due date, waive the late fee and continue to provide an "current" payment status to credit bureaus.
If you're already late in payments, inquire if there's a hardship plan which could reduce the interest rate, or even lower the minimum payment.
Auto loans
How and if your lender will work with you will depend upon the lending institution, the situation and the condition the loan. Make contact before you miss a payment to avoid damaging your credit and risking . The lender might offer options such as forbearance, or even extending your loan period to lower the monthly amount you pay.
In the longer term, you might consider other options possibilities, like refinancing your loan.
Student loans
The payment requirement is not currently in place for federal student loans They haven't even been required to pay since March 2020. by 2023.
If you're a private student with loans, ensure that you pay the minimum monthly installment in the event that you are able. If not, ask the loan provider or servicer about ways to reduce or postpone the amount of your loan. Most private lenders provide postponement, temporary reduction of payments or other flexible repayment options for borrowers experiencing economic difficult times.
If you put off payments for any reason the interest rate will continue to grow. If you can, make payments on the interest during this time.
Mortgages
Contact your lender before you miss a payment and/or make an incomplete one. They may provide a forgiveness arrangement or short-term loan.
If you're purchasing a house and a shutdown is likely to delay loan approvals or closing dates, particularly when you're taking out an backed by the government loan. If that looks likely, work with your agent for real estate or landlord of choice to ask for an extension on the dates of your move.
Personal loans
If you've paid for your necessities and you're able to still pay the monthly installment on your personal loan, you should. If not, contact your lender to see whether your account is qualified for relief.
Some lenders could offer a flexible payment plan or hardship plan, or may waive late charges. They may also not report late payments to credit bureaus.
Small-sized companies
If a shutdown delays your U.S. Small Business Administration loan approval, there are other options, including non-SBA bank loans as well as business lines of credit , and online loans However, rates will likely to be higher.
It is also possible to apply for grants, but keep in mind that government-funded grants may not be available at this period.
Other ways to cope
Find a zero- or low-interest loan
Some credit unions and banks have offered low-interest or no-interest loans to furloughed federal workers during shutdowns in the past. Check with your financial institution, and make sure you know the eligibility rules and the repayment terms.
Especially during a time when your next payday is uncertain, resist the convenience of payday loans, which are generally due in just two weeks and carry triple-digit interest rates.
Increase your earnings by digging out
When bills pile up for reasons of any kind, it can help you find breathing room. The gig economy makes it easier to discover temporary opportunities for earning.





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