What Happens When All the Rent Is Due, Your Funds Are Depleted, Can You Still Get Payday Loans?

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Millions of Americans who have been unable to pay their rent due to the epidemic face a mounting financial burden that threatens to drain their savings, damage their credit, and force them out of their homes but Citrus North is ready to help even if you have bad credit score you can still apply.

For the time being, a patchwork of government intervention is shielding many of the most financially disadvantaged renters. However, even when the rest of the economy improves, it may take years for these tenants — particularly low-income renters — to recover.

“Even if they say we can pay [missing rent] back in two or three years, that’s money we don’t have,” Kelly Wise, 32, of Los Angeles’ Westlake district, said. She is more than $10,000 late on rent after losing jobs selling souvenirs at concerts and cutting fabric for Hollywood productions.

Renters are threatened by debt. Some have managed to keep up with rent but rely on credit cards and high-interest loans to get by. Others owe landlords growing sums that must be paid when eviction moratoriums expire. This might harm credit ratings and result in pay garnishments.

Emily Benfer, head of the American Bar Association’s COVID-19 Task Force Committee on Eviction, stated, “We are setting up millions of individuals for long-term damage and a cycle of economic and housing instability.”

To pay the rent, renters throughout the country are raiding their 401(k)s, taking on higher-interest loans, and scurrying for hazardous, essential-worker positions. According to Moody’s Analytics and the Urban Institute, as of January, 9.4 million U.S. renter families owed an average of $5,586 in overdue rent, utilities, and late fees, totaling $52.6 billion.

According to some estimates, rent debt is more minor but still considerable. Because the situation is fluid, the actual magnitude of the issue is unknown, and current estimates are based on surveys and simulations rather than concrete evidence.

“[Bad] debt impacts your credit score, and credit scores influence everything in your life,” said Yuval Yossefy, a manager at the charity Legal Aid Foundation of Los Angeles.

In the face of job losses, lowered salaries, and widespread sickness, federal, state, and local authorities are dealing with how best to assist people in remaining afloat – including keeping them housed. A second year of the COVID-19 pandemic has provided no relief, with new coronavirus varieties threatening to speed up the virus’ transmission and create lengthier economic and social disruptions.

States are working on getting federal relief money, which has started to flow, into the hands of landlords to decrease tenant debt. California has established what state officials describe as the most robust statewide measures to address the problem, giving a possible blueprint for how states should distribute rent subsidies. California’s median rent is 50 percent more than the national average.

The California legislation adopted by the legislature last week extends a statewide moratorium on evictions for persons affected by the epidemic through June. They also prohibit landlords from utilizing rent debt accumulated between March 2020 and June of this year to refuse future accommodation, a nod to concerns that unpaid rent might have a long-term impact on people’s housing.

To safeguard the most vulnerable, they create a scheme that leverages government stimulus money to encourage landlords to cancel debt owed by low-income renters for a year, from April 2020 to March 2020.

It’s still unclear if California landlords would participate, how the program will be handled, and whether it will make a meaningful impact for people who are most in debt. Nonprofits dealing with low-income tenants warn that the measures might be challenging to execute and depend heavily on voluntary landlord involvement in canceling certain arrears altogether.

Eviction and debt might make it challenging to locate new accommodation, get loans, obtain certain sorts of employment, or budget for basic requirements such as food. The debt pile-on worsens a long-brewing issue in California, where rent was already expensive for most residents.

“A family making less than $30,000 a year will be on the edge of homelessness for the next 10 to 15 years because of this massive debt,” said Ana Grande, associate executive director of the Los Angeles-based charity Bresee Foundation which assists low-income families.

Worse, studies suggest that individuals in debt are the least likely to be able to repay it, even if their salaries return to normal. According to a combined USC-UCLA poll, families earning less than $25,000 in 2019 were more than twice as likely as all renters in L.A. County not to pay their rent during the epidemic. The second most prevalent category of nonpaying households is those earning between $25,000 and $50,000.

Nonpayment was also higher among Latino and Black Americans, who have been struck harder by the virus’s health and economic repercussions than white Americans. Given the country’s long-standing racial wealth divide, they are also less likely to have relatives that can aid financially.

An eviction “alters the course of a person’s life.”

A single eviction may trigger a cascade of difficulties throughout the nation.

According to housing lawyers and other experts, some landlords refuse to admit tenants with eviction records. At the same time, those who do are more likely to charge higher rents, fail to maintain their properties, and have apartments in risky areas.

According to studies, people who are evicted are more likely to suffer from despair and die for any reason. People may relocate far from their support networks or miss work while looking for new homes, causing them to lose their employment. At school, children lag.

“An eviction is not a one-time occurrence in a person’s life,” Benfer said. “It genuinely alters the course of a person’s life because of the financial and mental health consequences.”

Experts argue that eviction is especially deadly in the event of a pandemic since it forces people to bunk with friends and relatives in overcrowded dwellings, hastening the spread of the virus.

According to Ariel Nelson of the National Consumer Law Center, without an eviction on one’s record, debt and bad credit ratings may make it difficult to secure a home, forcing individuals to live in substandard circumstances.

Poor credit ratings also make it more challenging to get low-interest vehicles, housing, and other loans, putting homeownership even more out of reach.

According to Bruce McClary, a spokeswoman for the National Foundation for Credit Counseling, past-due debts on a credit report may cause certain companies to reject an applicant for professions that require handling money, such as bank teller or restaurant cashier.

Creditors may garnish salaries if debts are not paid, albeit limits on how much discretionary income creditors can seize.

To avoid this, people may delve into their funds or reduce their food intake. They may be forced to take out the only loans accessible to them: exorbitantly high-interest loans that critics claim are practically impossible to repay.

Some renters have already begun to fall into debt. According to the USC-UCLA research, in July, 8.5 percent of questioned renters paid some rent using a credit card, compared to 3 percent in other months. Almost 8% took a payday or different kind of emergency loan.

An out-of-work graduate student in Lakewood told The New York Times that she asked for and received a budget increase for her student loan to pay rent, which increased her overall student loan debt. A music industry layoff reported they took out a 401(k) loan. Some of those polled stated they had already depleted their money.

Lamonte Goode, a 44-year-old dancer, says he may have to go into his savings to pay the nearly $10,000 he owes in late rent. With COVID-19 regulations preventing TV programs and theatrical performances, Goode said he hasn’t had consistent employment since March and is searching for work outside of his trade to help pay the expenses. He added that unemployment hasn’t been enough to meet expenditures, including his $1,800-per-month rent in West Hollywood.

When asked whether he believed he’d be able to pay back the loan, Goode responded he didn’t know but was working hard to come up with the funds. He also posed the issue of who should bear the brunt of the responsibility. “I am not the cause of COVID’s occurrence. Nonetheless, I must repay a debt over which I have no control.”

“The fact that someone lost their job and couldn’t pay their rent is a very unique and extreme circumstance that does not and should not have a bearing on their creditworthiness for the next almost-decade,” said Nisha Kashyap, a staff attorney at the pro bono law firm Public Counsel, citing the length of time bad debts typically stay on a credit report.

“This is a completely unexpected worldwide epidemic.”

Fears of mass evictions and long-term credit damage, according to Sid Lakireddy of the California Rental Housing Assn., which represents landlords in the state, are exaggerated. He added that most landlords would prefer to work out repayment arrangements with their tenants than battle an eviction or debt in court, mainly because vacancies have increased in many locations. “The last thing we want to do is to evict a good renter.”

The federal government and state and municipal authorities have said that they are attempting to assist both renters and small landlords who are experiencing difficulties.

In December, then-President Trump signed a bipartisan stimulus measure authorizing $25 billion in rent and utility assistance subsidies throughout the country. President Biden has extended the countrywide eviction moratorium for those affected by the epidemic until the end of March, despite opponents’ claim it is ineffective.

The new California legislation is stricter and includes procedures to lessen the risk of pandemic debt having far-reaching consequences.

According to the legislation, landlords are prohibited from selling or assigning any rent debt accumulated during the epidemic until July 2021.

According to Russ Heinrich, the spokesman for the state’s Business, Consumer Services, and Housing Agency, the rule goes even farther for low-income residents facing economic challenges. It prohibits landlords from selling rent arrears accumulated through June for the rest of their lives.

Because debt collectors, not landlords, report to the credit agencies, this would eliminate one of the most common ways credit scores might be harmed, according to Nelson, the attorney. According to Heinrich, the legislation offered various incentives for landlords to join in the low-income tenant rent reduction scheme, and making it obligatory would have been legally unfeasible.

Still, some argue that the legislation places too much emphasis on renters understanding their rights and having the resources to exercise them, leaving the poorest tenants at a disadvantage.

During a recent press conference conducted online by tenant activists on their worries about the bill, Stephano Medina, an attorney with the Eviction Defense Network, revealed that some residents had already been evicted. According to Medina, moratoriums do not prevent landlords from pursuing lawsuits, and renters may be unaware that they must appear in court to defend themselves.

According to Leah Simon-Weisberg, legal director of Alliance of Californians for Community Empowerment, an organizing group that advocates for low-income households, a clause prohibiting landlords from denying housing based on rent debt accrued during the pandemic is likely to be particularly difficult to enforce. Tenant applicants are often screened by prospective landlords via their previous landlords, enabling them to learn about debts on which they are not permitted to make choices.

It’s also unknown how many landlords will take advantage of the state’s rent assistance program, which pays landlords 80% of what they owe in exchange for forgiving the remaining 20%. That, according to Lakireddy, is a decent offer that many landlords will likely accept.

According to Tina Rosales, a lobbyist with the Western Center on Law and Poverty, California’s rent-control legislation may make the landlord’s choice more difficult. According to state law, landlords may charge whatever they want for a rent-controlled property after it becomes unoccupied. If a renter pays much below market rates, it may be more profitable to seek eviction than to forgive arrears.

“It has the possibility for landlords to pick and choose whose tenants they would engage in the program with,” Rosales added, implying that the most vulnerable would be affected.

Given the wide range of rent owed estimates, another unanswered concern is how far California’s rental assistance money will go. Some tenants, for example, may lose out on debt forgiveness because the pool of money runs out, not because their landlord refuses to join.

For many people who cannot work from home, the expense of living in a house becomes a decision between going into debt or risking acquiring COVID-19 on the job.

The difficult decisions made by one family

The Buenos, a family of five from Koreatown in Los Angeles, was like many other dynamic families around the nation. Fernando was preparing fish for a sushi restaurant. Maribel, his wife, worked as a brunch chef in downtown Los Angeles.

The oldest of three sisters, Maria worked at a big-box shop and helped with household expenses. She made a goal to purchase a house by the age of 30.

The Buenos have dispersed. Before the pandemic, Maria’s father was sent to New Jersey for a promotion, but his hours were quickly reduced when lockdowns were implemented. Her mother lost her job and went across the nation to join Fernando with her youngest daughter.

The expenses fell on Maria, who lived in Koreatown with her 18-year-old sister, Pamela. Their parents send money, but it isn’t enough to support the $2,500 monthly rent, even with Maria’s $20-an-hour income. She has spent all of her $3,000 in savings and is still $15,000 behind her rent.

Maria is concerned about protecting her younger sister and preventing the two of them from becoming homeless.

When the rent protections expire, James Engel, a partner with the business that runs Bueno’s building, said the company intended to negotiate with tenants on multiyear repayment arrangements instead of pursuing evictions and collections. He refused to comment on specific renters’ instances.

Maria says she doesn’t want to risk being in debt during the epidemic, so she’s searching for a second job.

She’s prepared to risk becoming sick if it means saving her life.

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