What to Do When You Can't Pay the Rent
COVID-19 has turned our lives upside down. Unemployment rates are at their highest since the Great Depression. Many face the uncertainty of whether they will have a job once this COVID-19 crisis is behind us. Meanwhile, rent is due and bills are piling up. What can be done now to avoid eviction, suspended utilities, or a hit to your credit rating? In fact, there are several important steps to take now.
First and foremost, know the reality of your situation. Cash on hand? Credit available? Family or friends willing to help? Unemployment payments approved, but not yet paid? Creditors cannot make agreements without knowing if the terms are actually realistic.
If paying the rent on time and in full is not possible at this time, contact your landlord or property manager as soon as possible, before the rent is late. Be realistic about what you can pay and when - nothing is worse than making an agreement you do not keep. When negotiating with the landlord, possible solutions could include the following:
Pay a portion now and make an arrangement to pay the remaining amount on an agreed upon date prior to the end of the month, assuming you will be receiving unemployment or some other income to make that possible.
Waive late fees due to the Coronavirus crisis.
Perform work for the landlord or property manager to offset some or all of the rent.
Lower the rent for 2-3 months during this time of crisis.
Reduce rent for 2-3 months but add the unpaid amount to remaining payments throughout the lease. (For example, 7 months remaining on lease. Pay $500 less for 2 months, total of $1000 delayed. Add $200 each month for remaining 5 months.)
Remember, while courts are not currently in session to hear eviction cases, the laws have not changed. Once courts reopen, landlords will take quick action if tenants have not paid their rent or made an arrangement. The worst thing you can do is to do nothing.
If making an arrangement is not possible because you don’t have the money or the landlord will not negotiate, then you may have to accept that an eviction is imminent. Your goal at that point is to move without having an eviction or broken lease on your record. As before, read your lease - some leases have grave consequences for ending the lease early. Even if you must move, work to negotiate the best move-out deal possible. Landlords have their own loans, taxes, and other expenses and may need to move quickly to get a new renter in who can pay. Landlords might be willing to waive some consequence of a broken lease in exchange for avoiding the time and expense relating to filing an eviction with the courts. Some negotiating strategies you could use include:
Offer to move by a mutually agreed upon date in lieu of filing an eviction.
If your lease is not up, explain your circumstances to the landlord. Ask if there is any way they could work with you to move out without the normal consequences.
Negotiate a move out date and make an arrangement to use part or all of your deposit to cover unpaid rents.
If all else fails and you are forced out of your home with no income to find a new residence, call any and all social services you can to ask for help. In many cities dialing 211 will connect you with resources.
Many of the same negotiating strategies will work with other creditors. The most important point is to contact your landlord or creditor as soon as possible, while options are still available.
In spite of these tough and uncertain times, being vigilant with your rent and debt accounts will yield the most favorable outcomes possible. Barahona Consulting & Mediation wishes you the best during this difficult time.