If a natural disaster has disrupted your life, it might feel like things will never go back to normal. As if it weren't difficult enough to see your home drastically impacted or even destroyed in the blink of an eye, the process of rebuilding can be long and complicated. Making matters even more difficult, regular life continues to go on while you rebuild, including your financial obligations, like bills. So what happens to your credit after a natural disaster, and is there any help in paying your debt while you put your life back together? Let's find out.
Nothing inherently happens to your credit after a natural disaster. However, the disruption that these events can have on our lives can set off a chain of events that can cause your credit to suffer. Here are some things you can think about that can help protect your credit after a natural disaster, and some options to help you get your financial life back on track.
Taking inventory is a solid first step for your finances after you've experienced a natural disaster. Instead of dealing with the added stress of all the things you need to remember, you can sit down and make a checklist to get your information into one place.
The Consumer Financial Protection Bureau (CFPB) has a great deal of information and resources to help those who've been through a natural disaster, including this checklist to help you get your financial information in order.
Once your checklist is complete, you can use this as a master sheet of all the creditors you need to contact and research assistance options for. And remember, there are likely to be assistance options you didn't know even existed before the natural disaster took over your life.
Find the help you need.
After you have a checklist of your financial obligations laid out, the next step is to start finding out what you need help with and whether or not there are programs to help.
The most likely hit taken in a natural disaster is damage to one's car or home. Even if you had the right type of insurance to cover this damage, losing time at work or even becoming unemployed because of a natural disaster can make a slide into default feel almost inevitable.
However, if your town has been officially declared a disaster area, you might be eligible for assistance. You can go here to find out if your area has been declared as such, and you can see what might be available to help you on FEMA's website.
For example, Consumer Reports says that if "your mortgage is underwritten by Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration or Department of Veterans Affairs, your lender must offer you some form of assistance in paying your mortgage following the disaster."
The Small Business Administration also has a program to help homeowners who experienced a natural disaster, which you can read more about here. And there's a program that helps you get into a new mortgage or pay for repairs, which you can read about here. In other words, it pays to do your research.
If you need additional assistance, the CFPB recommends talking to a HUD-approved housing counselor to get help. You can also talk to your mortgage lender about forbearance or loan modification options. Forbearance enables you to suspend your payments temporarily, while a loan modification can alter your loan entirely to a new, ideally easier to repay, structure.
Contact your lenders and creditors.
As for the rest of your financial obligations, such as student loans and credit cards, you should talk to your lenders about forbearance options. Federal Student Aid has options here to help federal student loan borrowers who experienced a natural disaster. If you have private student loans and credit cards that you're having difficulty paying, you can ask your lenders about their own hardship programs.
At this point, it's imperative that you stay in contact with your creditors. All it takes is one payment to fall through the cracks to experience damage to your credit score.
And that doesn't just mean your lenders; you should also stay in contact with your utility companies and other companies you have financial obligations with. For example, you can shut off your utilities for a period of time if your house is unlivable at the moment, rather than get billed for something you can't even use.
Other Factors to Consider
Keep in mind also that even if the natural disaster hasn't interrupted your employment, snail mail could be an issue if you've had to leave your home. If you rely on regular mail like this for your bills, set up a forwarding address. If you do things electronically, this might not be an issue you need to worry about.
There's no doubt that there are things that will seem more important to deal with right now than your finances. That said, staying on top of them means this is one be one area in your life can be stable while you rebuild.
Even if you aren't having trouble paying your bills now, it might be a good idea to talk to your creditors about your options. If things get more challenging during the rebuilding process, at least you'll be prepared. The more proactive you are, the better off you'll be.
Want to learn more? Find out what a financial checklist might look like and see where to find a list of financial problems to look out for after a financial disaster.