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

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How to Ensure Financial Stability in a Federal Shutdown
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Dec 21, 2022


Written by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring managing money 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 positions such as copy desk chief and team leader for design and editing. Her previous experience included news and copy editing for many Southern California newspapers, including the Los Angeles Times. She received a bachelor's degree in mass communication and journalism in The University of Iowa.







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If you're faced with a mountain of bills and no paycheck, address the essentials first. That means the roof that covers your head, medicine, food as well as heat, electricity, and -- for those who must be on the job despite a government shutdown -going to work.
What's to wait for? Most everything else.
Communicating with creditors is key to surviving a federal government shutdown and recovering afterward. This guide will help you navigate the process if an official furlough is affecting your household.
How do you deal with creditors?
A missed payments on a card (such as a credit card, mortgage, car loan or personal loan -- can knock up to 100 points from your score, and can take years to fully recover. There are times when you can't get around it however, it's worth asking lenders for programs that will aid you in avoiding credit harm.
First, visit each creditor's website or contact the customer service number to find out if they have programs available for government employees who are furloughed.
If a lender doesn't have a furlough program, inquire for policies that can accommodate short-term disruptions.
In the end, there is a decision to take . Utilize your social security safety net, too. Visit 211.org to get connected to your local aid programs.

Here's what to know about particular types of accounts and some strategies to deal with any disruption in income:
Credit cards
If you're able to make the minimum payment make it even if it's little late. There's a chance you'll be charged a late fee however, if you pay the minimum within 30 days of the due date, your account won't be considered "delinquent" in the credit report bureaus. If you make a late payment, it can affect your credit score and so does , not the entire minimum.
If you're unable to make a payment , but remain in good financial standing, contact the card issuer to explain. Certain cards will extend your due date, pay the late fee, and report the "current" payment status for credit bureaus.
If you're currently in arrears on your payments, you can ask if there's a hardship plan that could lower your interest rate or reduce the minimum amount you pay.
Auto loans
How or whether your lender will cooperate with you will depend depending on your lender's requirements, your situation and the status that you are in with your loan. Contact your lender before you miss the payment in order to avoid damaging your credit and risking . The lender may provide options like forbearance or an extension of the loan time to reduce the monthly amount you pay.
In the longer term, you might want to look into other such as refinancing your loan.
Student loans
Paying for loans isn't required for federal student loans They haven't even been required to make payments since March 2020. by 2023.
If you have private student loans you must ensure that you pay the minimum monthly installment when you are able to. If you aren't, inquire with you loan provider or servicer about options to postpone or reduce payments. The majority of private lenders will offer postponement, temporary payment reduction or other flexible repayment options for those facing financial difficulties.
If you delay payments due to reasons of any kind, interest will typically increase. If you can, make payments on the interest during this time.
Mortgages
Contact your lender before you make a late payment to make partial payment. They may provide a forgiveness program or a short-term loan.
If you're purchasing a house, a shutdown could slow loan closure dates or approvals, especially if you're taking out a government-backed loan. If that looks likely you should consult your agent for real estate or your current landlord to negotiate the flexibility of moving dates.
Personal loans
If you've met your basic needs and can still pay your monthly payments for your private loan it is recommended that you. If not, contact your lender to determine whether your loan is qualified to be repaid.
Some lenders may offer a flexible payment schedule or a hardship plan, or may waive late charges. Lenders might also forgo reporting late payments to credit bureaus.
Small-sized businesses
If a shutdown affects you from getting U.S. Small Business Administration loan approval, alternatives include non-SBA banks loans and business lines of credit , and online loans However, rates are likely to be higher.
It is also possible to submit an application, however, keep in mind that government-funded grants could also not be available during this time.
Other strategies to deal with the situation
Find a zero or low-interest loan
Some credit unions and banks have provided no-interest or low-interest loans to federal employees who were furloughed during shutdowns before. Check with your financial institution and ensure you are aware of the eligibility rules and repayment terms.
In particular, where your next payday is uncertain, resist the convenience of payday loans, which are generally due in just two weeks and carry high interest rates of triple-digits.
Make more money by digging out
When your bills are piling up due to whatever reason, this can assist you in finding some breathing space. The gig economy can make it easier to find temporary earning opportunities.





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