Consumer Corner Column

Consumer Corner: Know your rights regarding monthly payments

Release Date: Apr 27, 2020

By Kansas Attorney General Derek Schmidt

The COVID-19 pandemic and federal, state and local government responses to the virus have unfortunately created significant financial hardship for millions of Americans. In fact, more than 26 million Americans have filed claims for unemployment benefits over the past five weeks. It’s important that if you, your family members or friends are having trouble making payments on a home mortgage or car loan, you know your rights and know the available avenues for assistance. 

Regarding your home, the governor last month issued Executive Order 20-06 to temporarily prohibit foreclosures across the state in an effort to mitigate the impact of COVID-19. This order is currently effective through May 1. However, even with this order in place, if you are behind on your payments it’s best not to ignore the issue. Here are some tips to help you handle the situation:

  • Look for help as soon as possible by contacting either your lender or a U.S. Department of Housing and Urban Development (HUD)-approved counselor for free assistance. The number to find a HUD counselor near your location is (800) 569-4287.
  • Make sure to open all statements, notices and correspondence from your mortgage lender. If a response is required, respond as soon as possible.
  • Avoid companies that claim to help with mortgage modification and foreclosure prevention or recovery. These companies often charge large, upfront fees to assist you. Often, the assistance they provide is the same service you can get for free. Contact HUD for a local counselor.
  • If you are having difficulty managing your finances, you may wish to explore credit counseling options. For a list of approved credit servicing agencies in Kansas you may visit the Kansas Office of the State Banking Commissioner’s website at www.osbckansas.org.
  • Know your mortgage rights. Review your loan documents so you know what your lender may do if you don’t make your payments.  Discuss potential legal issues or problems with a qualified attorney.

Here are some tips to help you handle your monthly car payments if you’re unable to make them because you’ve lost your job or your income due to the COVID-19 response:

  • Again, don’t avoid the issue. Be proactive and contact your lender. Certain financial institutions are allowing people to delay payments or renegotiate payment schedules. Make sure to get any kind of agreement in writing.
  • It might make sense to refinance your loan with a lower interest rate or a longer term. If you plan to refinance, make sure it is with a credible lender.
  • If you miss payments, you could be charged a lot more in fees and hurt your credit. Thankfully, many lenders have voluntarily halted repossessions during the COVID-19 pandemic, but rather than being surprised with a repossession it’s best to contact your lender proactively and find out your options if you know you can’t make your payments on time.
  • Kansas has rules about how cars can be repossessed and what happens after. If lenders break the rules, they might lose other rights against you or have to pay you damages. If your car does get repossessed, you might still owe money for the difference between what the car sells for and what you still owe on it. An attorney can help walk you through the process on how to challenge a repossession or a deficiency judgment.

The most important takeaway is to be proactive. Talk to your home or auto lender to find out your options and make a plan.

More information about your rights regarding your monthly home and car payments is available at www.InYourCornerKansas.org or by calling our consumer protection hotline at (800) 432-2310.

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