What Happens If You Can't Pay Rent? You May Still Have Options

Though vaccines are slowly becoming available, the COVID-19 crisis could still have you worrying about what happens if you can't pay rent. You're not alone—a recent study found that as many as one in five renters are behind on their monthly housing costs due to the effects of the pandemic.

If rent is on your mind, there are resources available to help along with steps you can take to protect your home and family.

Know your rights and resources

President Biden signed an executive order that extended the eviction moratorium nationwide through August 26, 2021. While the moratorium has ended, you can still find rental assistance programs in your area through the Consumer Protection Financial Bureau.

If your building doesn't meet the federal eviction moratorium guidelines, you can use the nonprofit site Legal Help FAQs to see what other relief programs might be available at your state and city level. Enter your state in the search bar to start exploring options there.

Several states and cities have also established rent relief programs. The National Low Income Housing Coalition's directory has helpful resources available.

Negotiate with your landlord

If you're not covered by a federal, state or city-level eviction moratorium, negotiating with your landlord is the next reasonable action to take.

Your landlord may also be dealing with lower cash flow than usual, with many renters experiencing financial crunches. If you make an appeal to see about a payment agreement, it's possible they'll be willing to negotiate terms that are favorable to you both. Apartment Guide offers tips and a template for writing a rent assistance letter to your landlord.

As you negotiate, it's important to pay as much of your rent as possible, even when you can't pay the full amount. Keep meticulous records for every rent payment you make, including money order receipts, digital payment confirmations and canceled checks. And don't wait until you're months behind to reach out. The sooner you start communicating with your landlord, the better.

Explore sources for emergency funds

It's hard to ask for help during the best of times. When times are tough, especially when those you know and love are also facing tough times, asking for help is even harder.

When you're worried about what happens if you can't pay rent, it might be worth exploring some alternative options for finding money to keep your rent paid.

You could consider taking a loan from your 401(k) or an early distribution from your IRA. If you have a Roth IRA, you can always tap your principal contributions early without a tax or penalty consequence.

Before tapping your earnings inside a Roth IRA or any of your retirement accounts, be sure to consult a tax professional as well as a financial consultant so potential income taxes don't catch you off guard. Even if there are tax implications, you might find they're worth it for the peace of mind of knowing your rent is paid.

If you don't have retirement savings or have already tapped those funds, it could be worth reaching out to your bank to see about a personal loan or line of credit.

Consult an attorney

If you find that the resources above have left you with nowhere to turn, consider reaching out to an attorney. Don't worry about finding the money to pay an attorney on top of not having enough money to pay your rent. In the vast majority of places, legal aid societies or tenants' rights nonprofits can help you navigate what happens if you can't pay rent in your area.

These local attorneys are well-versed in the housing regulations where you live and are used to helping people just like you through pandemic-related rent issues. To find a low- to no-cost attorney, do a web search for your city or county and "free legal aid."

No matter where you are with your rent during these trying times, there are ways to find the help you need. The first step is to explore your available resources and then open lines of communication with your landlord. With any luck, you'll find a path forward that will keep you in your home and get your rent paid on terms agreeable to both you and your landlord.