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How to Ensure Financial Stability in the event of a Federal Shutdown

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How to Stay Afloat Financially in the event of a Federal Shutdown
By NerdWallet. Follow NerdWallet on social media for news and updates

Dec 21, 2022

Editor: Kathy Hinson Lead Assigning Editor Personal finance, credit scoring, financial management and debt Kathy Hinson leads the core personal finance team at NerdWallet. Previously, she spent 18 years with The Oregonian in Portland in positions such as copy desk chief and team editor and designer. Prior experience includes news and copy editing at several Southern California newspapers, including the Los Angeles Times. She received a bachelor’s degree in mass communications and journalism in Iowa’s University of Iowa.

Many or all of the products we feature come from our partners, who pay us. This influences which products we review and where and how the product is displayed on the page. However, this doesn’t affect our opinions. Our opinions are entirely our own. Here’s a list and .

When you have a pile of bills but no money start by addressing the necessities first. That means the roof that covers your head, medicine, food, heat, electricity and — for those who have to work regardless of a government shutdown- getting to work.
What’s to wait for? Most everything else.
Communicating with creditors is key to surviving a federal government shutdown and then recovering. Here’s how to navigate the procedure if a furlough for federal workers has hit your household.
How to deal with creditors
In the event of a missed installment on your credit line like a mortgage, credit card, auto loan or personal loan can take up to 100 points from your score, and it could take years to recover fully. There are times when you can’t stay clear of this but it’s worth asking your lender if they have programs to help you avoid credit score harm.
First, go to each creditor’s website or contact the customer service line to see if it has programs in place for government employees who are furloughed.
If a lender doesn’t have a furlough policy, inquire about policies to accommodate temporary disruptions.
Finally, you may have to make . Utilize your social security safety net too. Contact 211 or go to 211.org to get connected to your local aid programs.

Learn more about specific types of accounts as well as some tips to deal with any interruption in income:
Credit cards
If you’re able pay the minimum amount make it even if it’s bit late. It’s likely that you’ll be charged a late charge, but if you make the minimum within 30 days of the due date, your account will not be classified as “delinquent” in the credit report bureaus. If you make a late payment, it can affect your credit score — and so does , not the full minimum.
If you can’t pay but you remain in good financial standing, contact your credit card company to clarify. Some may extend the due date, waive the late fee and provide the “current” status of your payment with credit reporting bureaus.
If you’re already late on payments, ask if there’s a hardship plan which could reduce the interest rate, or even lower the minimum amount you pay.
Auto loans
How and if your lender will work with you will depend depending on your lender’s requirements, your circumstances and the status the loan. Make contact before you miss the payment in order to avoid damaging your credit and the risk of . The lender might offer options such as forbearance, or even extending the loan period to lower the monthly amount you pay.
Longer term, you may be interested in other options possibilities, like Refinancing the loan.
Student loans
The payment requirement is not currently in place for federal student loans; borrowers haven’t had to make any payments until March 2020. In 2023, the deadline for payments is set.
If you’re a private student with loans, pay a minimum monthly amount when you are able to. If you aren’t, inquire with you loan provider or servicer about options to postpone or reduce the amount of your loan. The majority of private lenders offer postponement, a temporary reduction in payments or other flexible repayment options for borrowers experiencing economic hardship.
If you delay payments due to reasons other than your own the interest rate will continue to grow. If you are able, pay the interest at this point.
Mortgages
Call your lender before you make a late payment to make partial one. They may provide a forgiveness arrangement or short-term loan.
If you’re buying a home and a shutdown is likely to cause delays to loan approvals or closing dates, particularly if you’re taking out a government-backed loan. If this is the case, work with your realtor or current landlord to seek the flexibility of moving dates.
Personal loans
If you’ve covered your essentials and are able to make the monthly payment on your personal loan it is recommended that you. In the event that you aren’t, call your lender to see whether your loan is eligible for relief.
Some lenders could offer a flexible payment plan or hardship plan, or even waive late charges. They may also not report unpaid payments to credit bureaus.
Small-sized businesses
If a shutdown holds up your U.S. Small Business Administration loan approval, other options include non-SBA banks loans, business lines of credit , and online loans however rates will likely to be higher.
You can also apply for grants, but keep in mind that government-funded grants might also be unavailable during this time.
Other methods to manage
Find a no- or low-interest loan
Certain banks and credit unions have provided no-interest or low-interest loans for federal employees on furlough during shutdowns before. Contact your financial institution, and be sure you understand the eligibility rules and repayment terms.
Particularly during times where your next payday is not certain, avoid the ease that comes with payday loans, which are generally due in two weeks and carry high interest rates of triple-digits.
Make more money by digging out
When bills pile up for whatever reason, this can help you find breathing room. The gig economy makes it easier to find opportunities to earn money on a temporary basis.

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