The CARES Act: Your Action Required

Use these links to jump to different sections:

• Do the Protections Still Apply?
• What Action Is Required?
• But Are the Protections Equal Across the Board for All Consumers?
• Remember: Monitor Your Credit

When congress passed the Coronavirus Aid, Relief and Economic Security [CARES] Act in March 2020 as a federal government response to the COVID-19 pandemic, consumer protection lawyer Kristi C. Kelly had a feeling she was about to be very busy. “As a consumer protection lawyer, I have to constantly stay abreast of what is new and what is going on that effects consumers,” Kelly says. “The CARES Act provides some very important consumer protections to individuals who have been impacted by COVID-19.”

Do the Protections Still Apply?

Yes, the protections still apply to individuals who have suffered unemployment, reduced income or any financial hardship due to the pandemic, although it remains to be seen what changes could occur with a new administration in 2021. And even though it’s been months since the sweeping legislation was passed, Kelly says people still don’t completely understand their rights. “While the CARES Act has the potential to help millions of consumers, many parts of it are not automatic,” she says. “Right now, if you get ill with COVID-19 or a family member gets ill or, God forbid, passes away, those are the issues you’re focusing on: not finances. But people need to understand that you need to take affirmative action to obtain certain CARES Act protections.”

What Action Is Required?

It can be as easy as a phone call, Kelly says. If you are struggling, she suggests contacting your various creditors, like your mortgage servicer, auto financier or credit card lender. “You just ask, ‘Can I have a CARES Act forbearance? I have a lot going on, I have a family member who’s sick, I got laid off, I am furloughed, my hours are reduced,’ whatever it is, and you can get your payments into forbearance.” If it sounds a little too simple, Kelly says it’s supposed to be. “There has never been a better, or easier, time for consumers to get help from these types of lenders in efforts to save their home, keep their vehicles and avoid negative impact on their credit report that could last for years,” she says.

But Are the Protections Equal Across the Board for All Consumers?

There could be differences. When it comes to your mortgage, for example, Kelly says some consumers are more protected than others. “Those with an FHA, or a mortgage backed by Freddie Mac or Fannie Mae, or who have a Department of Veteran Affairs loans, may have additional protections that others with different mortgage servicers don’t,” she says. There could also be differences in how your particular forbearance works and other financial assistance. In a traditional forbearance model, payments not made during the time of forbearance are not going to have a negative impact on your credit, and repayments simply resume at the end of your forbearance period. But, Kelly warns, some models may hurt consumers more than help them if they don’t understand how it operates. “Depending on your servicer or type of mortgage, all of your missed payments could be due at the end of your forbearance period, and that’s not really benefiting consumers, just delaying a negative impact,” she says. “In fact, that could put them in the exact position they were trying to avoid by taking advantage of CARES Act protections. So, there could be problems in terms of people being unfairly treated when determining how to handle the missed payments, and litigation might result.”

Remember: Monitor Your Credit

If you are a consumer who has taken advantage of CARES Act enactment and protections, Kelly says be sure to monitor your credit report. “The CARES Act was a massive piece of legislation that really sought to change the way things are done in a lot of different industries, so with that, there are some errors that might occur,” she says. For example, some people might be in forbearance and still reported as delinquent and thus have negative credit ramifications as a result. “Or someone in forbearance comes current, and are still being reported in a negative fashion,” she says. Because of the pandemic, consumers can obtain their consumer credit files for free once a week at annualcreditreport.com. When just three months of missed mortgage payments can result in a negative credit score for seven years, “I can’t stress enough how important it is to know your rights under this Act,” Kelly says. “The hope is that by the time this pandemic is over, consumers, by and large, can get back to a sense of normalcy instead of digging out of some very deep holes.” If you have questions or concerns about your rights, an experienced consumer lawyer in Virginia can help. For more information on this area of law, see our overview of consumer law.