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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

By NerdWallet Follow NerdWallet on social media for news and updates

Dec 21, 2022

Written by Kathy Hinson Lead Assigning Editor Personal financial, 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 at The Oregonian in Portland in roles including copy desk chief and team editor and designer. Her previous experience included copy editing and news for many Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor’s in journalism and mass communications from Iowa’s University of Iowa.

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If you’re facing a mountain of bills and no paycheck, address the essentials first. That means your roof, medicine, food heating, electricity and, for those who must be on the job regardless of a government shutdownthe process of getting to work.

What’s to wait for? Almost everything else.

Communication with creditors is essential to surviving a federal government shutdown and recovering afterward. This guide will help you navigate the process in case a furlough for federal workers is affecting your household.

How to deal with creditors

A missed payments on a card (such as a mortgage, credit card, car loan or personal loan — could knock as much as 100 points from your score, and it could take years to fully recover. Sometimes there’s no way to get around it, but it’s worth asking lenders for programs that will aid you in avoiding credit damage.

The first step is to visit the creditor’s site or call the customer service line to see if it has programs for furloughed government workers.

Second, if a lender doesn’t have a furlough program, inquire for policies that can accommodate temporary disruptions.

There is another decision you might have to create . Make use of Social Services’ safety net, too. Call 211 or visit 211.org to get connected to your local aid programs.

Learn more about the different types of accounts available, plus some ways to deal with any interruption in income:

Credit cards

If you are able to make your minimum payment, do so, even if it’s a bit late. There’s a chance you’ll be charged a late fee however, if you pay the minimum payment within 30-days of your due date, the account won’t be classified as «delinquent» in the credit report bureaus. If you make a late payment, it can affect your credit score and it’s not the minimum amount.

If you can’t pay but you remain in good financial standing, you can call your card issuer to explain. Some may extend the due date, waive the late fee and report the «current» credit status for credit bureaus.

If you’re currently in arrears in payments, inquire whether there’s a plan for hardship that can lower your interest rate or reduce the minimum payment.

Auto loans

How or whether your lender will collaborate with you will depend depending on your lender’s requirements, your circumstances and the state the loan. Make contact before you miss the payment in order to ensure that you don’t damage your credit and taking a risk . The lender could offer alternatives like forbearance or an extension of the loan time to reduce your monthly payment.

Longer term, you may be interested in other options alternatives, such as 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 have private student loans you must pay a minimum monthly amount when you are able to. If not, talk to you loan servicer or lender about ways to reduce or postpone the amount of your loan. Many private lenders will offer postponement, a temporary reduction in payments or other repayment options that are flexible for borrowers experiencing economic difficulties.

When you postpone payments for any reason the interest rate will remain high. If you’re able to, you could make the payments on the interest in this period.

Mortgages

Call your lender before you miss a payment to make partial one. It may offer a forbearance arrangement or short-term loan.

If you’re buying a home, a shutdown could cause delays to loan approvals or closing dates, especially when you’re taking out a government-backed loan. If you think that’s the case 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 make the monthly payment to your personal loan, you should. In the event that you aren’t, call your lender to find out if your account is eligible for relief.

Some lenders could offer a flexible payment plan or a hardship plan, or even waive late charges. They may also not report missed payments to the credit bureaus.

Small-sized companies

If a shutdown affects the process of getting your U.S. Small Business Administration loan approval, there are other options, including non-SBA banks 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 , though bear in mind that grants funded by the government could also not be available during this period.

Other ways to cope

Find a low or low-interest loan

Some credit unions and banks have provided no-interest or low-interest loans to furloughed federal workers during shutdowns in the past. Make sure to check with your financial institution, and be sure you understand the eligibility rules and the repayment terms.

In particular, where your next payday is uncertain, steer clear of payday loans, which are typically due in two weeks, and have three-digit interest rates.

Boost your income to dig out

When bills pile up for reasons of any kind, it can help you find breathing room. The gig economy can make it easier to find temporary earning opportunities.

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