What to Do If You Can’t Pay Rent
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The current layoffs and inflation situation has made it difficult for a lot of people to save and set aside money. More than a third of the people across the U.S. are living paycheck to paycheck for the past few months and when there are no savings or emergency funds, it means a lot of us will be in a tough spot when it is time to pay rent.
Rent prices have increased in the last few years and it has become difficult to make rent payments without a consistent rise in income or savings. There are a lot of late payments and the inflation is soaring, it could become much more difficult to manage rent and the bills you have to pay each month. There are times when there is a need for assistance due to an emergency like a layoff or a life event, like childbirth or a medical emergency. In such cases, rental assistance loans or grants can help manage the payment.
With the end of the eviction moratorium, the times are tough, but there is light at the end of the tunnel. If you cannot pay rent, here are a few rent relief options you can consider.
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What to do if you can’t pay rent
Speak to the landlord
Whenever you struggle to pay the rent or are having a random tough month, the first thing you should do is talk to the property manager or the landlord and explain the situation. Be genuine and ask for help. If you have been living there for a long time, have been regular with the payments in the past, and have a good relationship, then they will be willing to work with you. No matter the situation, be transparent about why you cannot pay this month's rent. Most tenants will not ask you to leave and risk an empty unit.
Remember to contact them as soon as you can. If you wait until after you miss a payment, it might make the situation even worse. Do check the rent agreement to see if there is a grace period for rent payments.
Remember, you will not be evicted overnight. There is an eviction process that your landlord will have to follow before asking you to leave.
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Personal loans
Consider getting personal loan to pay for expenses in an emergency. Since the loan is usually unsecured, it will not require any collateral and comes with a fixed interest rate and a specific repayment term. This makes it better than using a credit card, where the monthly payments might vary. However, be careful while taking on the loan if you already have financial troubles. It could cause more problems if you cannot pay the loan on time. Another alternative is payday loans, which have very high interest rates and might not be worth it while you are already struggling with your finances.
Related: Best Personal Loans for Fair Credit
Use credit cards
This is a risky strategy, but use your credit card if you have no other alternative. You can ask the landlord to pay directly by credit card, but whatever balance is on the card will also be subject to high-interest rates. Paying through the card is abnormal, so you might have to explain it to the landlord. Besides the interest rate, there will be other fees, including late fees, attached to it. Be aware of all the costs before you use the credit card.
Cash advance
This is also a last-resort option. A cash advance from your credit card provides you with immediate cash but will have higher interest rates and fees. It might also hurt your credit score.
Borrow from friends and family
If you have no alternative, consider borrowing from your friend or a family member since they will be more flexible about the repayment. However, you will still have to use the funds like any other bank loan and ensure you pay the installments on time.
Move in with friends or family
If you cannot negotiate with the landlord and have no choice but to leave, you can consider moving in with your friends or family. When you move in with friends or family, you have a safety net in your tough times since it will give you more control over your living expenses. If you are struggling with rent while out of work, moving in with a friend can allow you to spend more time on job hunting. You can also save money when splitting the rent payment, housing expenses, or utility bills. This will make it easier for you to handle the finances.
Professional rental assistance support
Many people have struggled with rent even before the inflation or the pandemic, which has only made it more difficult for them. However, several local, state, and federal government programs can help avoid eviction. You need to understand the renter protections and look for programs created to help you in a difficult situation. Federal Emergency Rental Assistance is a highly useful program created to help cover the cost of housing for you. The funds will be directly provided to the local government, states, and territories for assistance programs. Based on where you live, the policy will apply.
Related: Best Low-Income Loans
Short-term rental assistance
If you have already received a notice of eviction, you can get professional help. The Legal Aid Society runs a non-profit legal service the government offers to help individuals and low-income families. They can help you look for a new home, get a payment extension, or block the eviction.
Alternatively, you can contact the local charity organizations for a one-time grant to help you with the rent before you get an eviction. Since it is a grant, there is no need to pay it back, and it will help you budget well. Here’s where you can find help:
- The Modest Needs program has grants of up to $1,000 from private funders that can help cover one emergency expense. You can apply by creating a grant request if you have a job.
- The Salvation Army chapters offer one-time assistance grants and help cover the payments. But you will have to apply in person and prove the hardship.
- The Department of Social Services also provides one-time housing assistance for rent if you prove a serious financial hardship. The assistance will vary from state to state, so check it before you apply.
- Catholic Charities also offer emergency assistance grants that can be used to pay rent. But here, also, you will have to make your application in person.
- The U.S. Department of Housing and Urban Development offers help with rent, energy bills, security deposits, actual housing, and housing counseling. It is a program for low-income individuals, families and those with disabilities, and the elderly.
- The National Low Income Housing Coalition enables you to look for emergency rental assistance programs in your area. That said, if you are a local community or religious congregation member, you can reach out to the leaders for help.
- Several programs can help you in tough times and can be found on Benefits.gov. It will also help you look for programs you might be eligible for.
Long-term assistance programs
You can check out the federal and state programs designed to help the elderly, low-income families, individuals as well as those that have disabilities to look for affordable housing in the long term.
- The Housing Choice Voucher Program is the biggest program by the federal government, and it caters to struggling families and individuals. The financial assistance is given on behalf of the individual or family, and the subsidy is provided to the landlord directly once a month. However, you will have to cover the remaining balance. This voucher program allows you to pick any housing which meets the program requirements and is not limited to the units that fall under the subsidized housing programs.
- The Home Investments Partnerships Program is another initiative that gives grants to the local and state governments. They offer affordable housing through buyers' assistance and direct rental assistance. This program is meant for low-income households. It also provides funds for the building of affordable housing. However, to get access to the funds, you must contact the local or state government or check out HUD online to learn how the program works in your area and understand how you can receive the funding.
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Get credit counseling
Your inability to pay this month’s rent might not be the only problem. There could be a bigger financial problem you need to work on. If this is the case, you should consider credit counseling to make decisions that can help improve your financial situation. You can speak to a credit counselor to understand your budget and get the right advice on handling money. Learn how a debt management plan works and set up a payment plan that works for you.
Related: Best Credit Counseling Companies
FAQs
Will it affect my credit score if I do not pay my rent?
Missing a rent payment does not directly impact the credit score, but if you continue to miss payments and the landlord sends them to collections, you will see an impact. With a poor credit score, there will be more challenges for you. Besides that, the landlord could add the missed payments and eviction notice to the rental history report, and it will become difficult for you to find a place since landlords view this document when screening tenants.
How do I apply for rental assistance?
If you want rental assistance, apply to the Emergency Rental Assistance program at the U.S. Department of Treasury. You can apply for the assistance yourself or have the landlord do it based on the area. It also provides assistance to cover home energy costs and utilities.
What should I not do when I cannot afford rent?
You must not do some things when you cannot afford rent. Avoid writing a check that can bounce, do not lie about your situation to the landlord, and do not sit back and wait for the situation to improve.
The bottom line
If you are struggling to pay rent, you are not alone. There is help available for you and several options you can consider. Missing a rent payment could have serious consequences, so you must take immediate action. Speak to the landlord immediately or ask friends or family members to help. Try to look for a solution as the situation improves. You might not find a solution overnight, but trying your best to handle the situation doesn't hurt.
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Writer
Vandita Jadeja is a financial writer and editorial assistant at Joywallet. She loves to read and write about money and brings 7 years of experience from the financial industry. She loves coffee, mountains and sunsets.
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