Dealing with unemployment or loss of income brought on by the current crisis.
The hospitality industry has been one of the hardest hit by COVID-19. Layoffs for restaurant workers, bartenders, hotel staff, and other service professionals are staggering.
- Nearly half a million hospitality professionals lost their job in March, accounting for nearly two-thirds of the jobs lost last month.
- The National Restaurant Association predicts 5 to 7 million service professionals will lose their jobs if the shutdown continues for three months.
“This crisis is overwhelming for people working in the service industry,” says Gary Herman, President of Consolidated Credit. “No one knows when restaurants, bars, and hotels will be open for business again, or once they are how quickly the industry can bounce back. People need help now.”
To help people in the service industry get through the economic crisis caused by COVID-19, Consolidated Credit has put together this financial relief guide. We hope that it will help direct you to resources and income solutions that you may not have considered.
If you have questions, you can call Consolidated Credit’s Financial Hotline at (844) 276-1544 for free financial counseling. Certified counselors are available Monday – Friday from 8 am to 10 pm (Eastern Standard Time).
Applying for Unemployment Insurance Benefits
The U.S. Department of Labor has expanded the guidelines for qualifying for unemployment insurance (UI).
Even if you haven’t been fully laid off from your job, you may be able to qualify through your state’s program. The new guidelines allow you to qualify for UI:
- if your employer temporarily closed due to COVID-19
- you’re unable to work because of a quarantine order
- you left due to a risk of exposure, infection, or to care for a sick family member
If you are on paid sick leave, you would generally not qualify. Otherwise, this is a good path to pursue.
Each state has different rules for unemployment insurance benefits. You can look up the benefits for your state through CareerOneStop.org.<
Take note of:
- if you meet the eligibility requirements in your state
- how much you can receive
- how long you can receive benefits
This information will help you plan accordingly. You will be able to estimate how much of your budget you can expect to cover with UI.
Most state programs allow you to file for UI online or over the phone. Due to the high volume of claims being made, phone lines may send you straight to a recorded message to try back later.
Filing online will help you get your claim in as quickly as possible and help you avoid the stress of trying to get your call through.
In normal circumstances, the Department of Labor says that it can take up to 2-3 weeks to begin receiving benefits. In the current situation, you may need to plan for benefits to take extra time to receive.
Explore Hospitality Relief Funds
There is a range of relief funds and grant programs for restaurant workers, bartenders, and hospitality workers. These programs aren’t a long-term solution, but they may provide extra cash to replace at least some of your income while you wait for businesses to reopen.
- Restaurant Opportunity Centers United has a comprehensive list of national resources for hospitality workers, as well as state listings.
- Check with your state’s Restaurant or Hospitality Trade Association, which may have additional local programs you can research
- Contact the hotel chain or restaurant group that you are or were employed through. Companies such as Marriott have their own programs.
Be aware that most relief funds and grant programs provide limited amounts, usually as a one-time distribution. Apply for as many programs as possible to supplement as much lost income as possible.
Seeking out other sources of funds
Besides UI and hospitality relief programs, there may be some other avenues that you have available to get some much-needed income.
While restaurants and hotels may be closed, delivery services are one of the few industries hiring right now. You may be able to pick up work through a food delivery service such as DoorDash, or with a general delivery service such as Amazon.
You can also check with grocery stores, hardware stores, and other retailers that have been deemed as essential where you live.
If you are receiving unemployment benefits or plan to receive them, just make sure to check your state’s unemployment program qualifications to understand how part-time work may affect your eligibility for UI.
Most hospitality workers, particularly those who live on tips, receive a tax refund each year. Although the tax filing deadline has been extended to July 15, there’s nothing stopping you from filing now. The sooner you file, the sooner you can get your refund.
Filing is especially important if you’ve changed bank accounts or moved since you filed your 2018 returns. Stimulus checks will be distributed via direct deposit or physical mail, based on how you received your refund last year.
If your information has changed, filing your 2019 returns promptly will help ensure you get your refund, as well as your stimulus check, as soon as possible.
The U.S. Treasury started distributing stimulus checks, sending 80 million payments in the first week. However, experts warn that some people may have to wait until early September before they receive their check.
>The IRS plans to get a stimulus check status website up and running, which would allow you to monitor your relief. However, the system is not up and running yet.
Asking for help isn’t easy, but this is a crisis. People who have not suffered any income loss are often looking for ways and people to help. Now is the time to ask.
If you ask a friend or family member directly, make sure it’s clear whether the money is a gift or a loan. Someone can gift you up to $15,000 without being subject to a gift tax on their federal income taxes next year.
If the money is a loan, make sure to set clear terms for repayment. The person loaning you the money should be fully aware of your situation. Make sure they understand that you may not be able to repay them until jobs return in your industry.
If you don’t want to ask a single individual directly, consider setting up crowdfunding through a reputable site, such as GoFundMe.
Tips for addressing challenges with bill payments
Depending on your situation, you may be forced to make some tough choices when it comes to your budget. The important thing to keep in mind is that many service providers, creditors, and lenders have programs set up to address payment issues caused by COVID-19.
“Talk to your providers and creditors if you’re having trouble making a payment,” Herman encourages. “An open line of communication may be key to getting relief without ruining your credit. Ask about forbearance, which can pause or reduce your payments. But talking to someone is essential. Don’t hide because you could face late fees, penalties, and added stress that you don’t need”
If you’re a homeowner, your mortgage lender may offer deferment if you are unable to make your monthly payments. This will temporarily stop your mortgage payments for a period of time, which could be critical for you.
You can also talk to a HUD-certified housing counselor to discuss deferrals and other relief options. Call 800-745-2513 to speak confidentially with a housing counselor at no charge.
If you have federal student loans, the payments have been suspended from now until at least September 30.
You do not need to apply to have your payments suspended – it’s automatic, regardless of which loan servicer you have.
Interest is also 0% through September 30. If you make a student loan payment now, 100% of the payment amount will go to pay off the principal balance on the loan.
If you made payments after March 30 and you’re facing unemployment now, you can also ask for a refund. Getting those funds back may help you cover other bills.
If you have private student loans, contact your lender. They may have options to suspend or reduce your payments as well.
Some states, counties, and cities have suspended shutoffs of utility services due to nonpayment. If you live somewhere that a shutoff suspension order is in place, your electric company or water company can’t turn off your power or water just because you can’t pay your bill.
If you live somewhere where shutoff suspensions haven’t been ordered, then you need to continue to prioritize these bills. Keeping power and water running while you’re under stay-at-home orders is crucial.
You may have received COVID-19 notices from your credit card companies and other financial providers. Many companies have issued statements encouraging customers to contact them if they’re having trouble making a payment due to COVID income loss.
Experian is maintaining a running list of creditors and lenders and their individual resource pages. If you can’t find emails from your providers in your inbox, this is a good place to start.
Advice if you still have a source of income
“It’s imperative that you do everything you can to shore up your finances if you still have income coming in,” Herman advises. “If shutdowns continue, you may still face layoffs or severe pay cuts. Being proactive can put you in the best possible position if the worst happens.”
- Cut anything that’s not absolutely essential from your budget. As hard as it may be, cut back streaming services and cancel any subscriptions you can. Limit yourself to one streaming service, so you’re not left without any entertainment
- Pad your savings as much as possible. Find items you can sell, file your tax returns to get your refund and deposit all of your stimulus into savings when you get it
- Avoid credit card debt whenever possible. Adding to your balances now is risky right now. Balance your budget to avoid new debt
If you’re currently carrying balances on multiple credit cards that you need to pay down, consider a debt management program. It’s a repayment plan for credit cards that can help minimize or even eliminate interest charges. This will help you pay off your balances faster and may lower your monthly payments as well.
“We recognize that service professionals need help,” Herman says. “In addition to the shutdown hotline, we’re waiving setup fees on debt management programs for hospitality workers and other service professionals affected by COVID-19. If you have the means to start paying down your debt, we want to make that as easy as possible.”
Call Consolidated Credit’s free hotline at 800-745-2513 for free one-on-one financial counseling.