Thank you to DLA Piper for updating the below content with North Carolina information.
Back to the Disaster Assistance Manual
7.1 – Social Security Benefits
If your client did not receive his or her regularly scheduled payment from the Social Security Administration (the “SSA”) due to severe weather or other emergencies, in most cases, he or she can go to any open SSA office and request an immediate payment. To find the nearest SSA office call 1-800-772-1213 (TTY 1-800-325-0778). Social Security representatives are available by phone between 8:00 am and 7:00 pm on weekdays, while automated telephone services are available 24 hours per day. You can also visit the SSA’s website at https://www.ssa.gov.
With very few exceptions, the SSA requires that a person sign up for their Direct Deposit service (https://www.ssa.gov/deposit/). With Direct Deposit, one no longer receives a check in the mail. Instead, payments are deposited directly into one’s bank, savings and loan, or credit union account no matter what happens to interrupt mail service. If your client does not have a bank account, one can sign up for a Direct Express card (https://www.usdirectexpress.com/), which works like a debit card. The benefits are loaded onto the card for your client to use without having to have a paper check. If you need to enroll for Direct Deposit or Direct Express, instruct your client to visit the above referenced websites, go to his or her nearest SSA office, or visit https://www.ssa.gov.
Additionally, if the applicant is eligible for Social Security benefits such as retirement benefits, Social Security Disability Insurance (“SSDI”) or Supplemental Security Income (“SSI”), the applicant may apply at the nearest SSA office or by calling the SSA’s toll free telephone number 1-800-772-1213 (TTY 1-800-325-0778). The applicant may start his or her application for disability benefits online at https://secure.ssa.gov/iClaim/dib. The applicant may apply for Retirement Benefits and Medicare online at https://secure.ssa.gov/iClaim/rib, or by calling 1-800-633-4227 (TTY 1-877-486-2048). For further information about retiring and/or enrolling in Medicare, see https://www.medicare.gov/basics/get-started-with-medicare/sign-up, https://www.ssa.gov/benefits/medicare/, and https://www.ssa.gov/benefits/retirement/.
Generally, the applicant is eligible for retirement benefits at the age of 62 and after having worked a requisite number of years. The applicant is eligible for SSDI if the applicant is deemed to be medically disabled and has worked a requisite number of years. The applicant is eligible for SSI if the applicant meets certain financial requirements (e.g., income, assets) and is either 65 years or older, blind, or disabled. An applicant may be eligible to receive both SSDI and SSI. Effective January 1, 2021 the maximum monthly benefit under SSI (https://www.ssa.gov/OACT/COLA/SSI.html) is up to $794 for an individual and $1,191 for an eligible individual with an eligible spouse. North Carolina additionally pays a supplement (https://www.ncdhhs.gov/assistance/adult-services/state-county-special-assistance) to SSI recipients who live in adult care homes and those in a special care unit for Alzheimer’s.
Eligibility for SSI on the basis of disability will depend on an initial review of the applicant’s disabled status by the North Carolina Disability Determination Services (“DDS”), a division of the North Carolina Department of Health and Human Services (“DHHS”). DDS will send a written eligibility decision after completing its review. While the SSDI and SSI are federal programs, DDS is responsible for determining whether an applicant is disabled. In general, if DDS determines that an applicant is disabled, the applicant will automatically be enrolled in either Medicare (if approved for SSDI) or Medicaid (if approved for SSI), subject to certain conditions (e.g., collecting SSDI benefits for 24 months). After SSA receives the initial application for benefits under SSDI or SSI and determines that the applicant meets basic eligibility requirements (e.g., income level, work experience), the SSA forwards the application to DDS. The DDS website can be found at https://www.ncdhhs.gov/divisions/disability-determination-services, and the DHHS website can be found at https://www.ncdhhs.gov/about/overview.
The mailing address, physical location, telephone and fax number for DDS are the following:
P.O. Box 243
Raleigh, NC 27602
Dorothea Dix
3301 Terminal Drive
Raleigh NC, 27604
Phone: 1-919-212-3222
Fax: 1-800-804-5509
If an application is denied and the applicant wishes to appeal, the North Carolina DHHS directs applicants to contact the local SSA field office for assistance in preparing documents necessary for the appeal. An overview of the appeals process is provided by the SSA online at https://www.ssa.gov/benefits/disability/appeal.html?tl=0 and https://www.ssa.gov/ssi/text-appeals-ussi.htm. The appealing applicant should file a Request for Reconsideration (https://www.ssa.gov/forms/ssa-561.html) along with other required forms within 60 days of the date after the denial letter is dated. If the applicant’s Request for Reconsideration is denied, a Request for a Hearing Before an Administrative Law Judge (https://www.ssa.gov/forms/ha-501.html) must be filed within 60 days. That should be done as quickly as possible and then for further help or advice, the applicant should consult his or her nearest Legal Services provider. The hearing before an administrative law judge provides the applicant the opportunity, in contrast to the earlier stages, to be seen and speak with the administrative law judge who reviews their claim. For this reason, it is important that the applicant thoroughly prepare for his or her hearing. If the applicant receives an adverse decision from the administrative law judge, applicants may seek an Appeals Council review within 60 days of adverse hearing decision. Finally, if the Appeals Council denies the applicant’s review request or the applicant disagrees with the council’s decision, the applicant may file a civil action in U.S. District Court.
The applicant may also be eligible for other kinds of SSA benefits. The applicant may be eligible under his or her own account or, under certain circumstances, under someone else’s (e.g., retirement, elderly or disabled widow(er), or dependent family member of disabled, retired or deceased worker). If you think the applicant may be eligible for any of these benefits, the applicant should contact the SSA and apply.
A person may also be eligible for Social Security Survivors benefits
(https://www.ssa.gov/benefits/survivors/ifyou.html#h6) if a spouse, an ex-spouse, or parent died, subject to other conditions. That person may also be eligible for a $255 one-time death benefit.
7.2 – Tax Relief
The IRS website has a section on disaster tax issues (https://www.irs.gov/newsroom/tax-relief-in-disaster-situations) where it posts all of the latest information related to tax relief available to disaster survivors as well as a FAQ for disaster victims (https://www.irs.gov/businesses/small-businesses-self-employed/faqs-for-disaster-victims). The page provides a comprehensive set of FAQs for disaster survivors. The IRS also maintains a “Disaster Relief Resource Centers for Tax Professionals” on its webpage (https://www.irs.gov/tax-professionals/disaster-relief-resource-center-for-tax-professionals) to provide resources for advocates assisting disaster survivors with tax issues. Advocates and survivors should use the IRS webpage as a starting point for their research. In recent disasters, the American Bar Association has shared with pro bono tax advocates the disaster tax chapter of its treatise, Effectively Representing Your Client Before the IRS.
Shortly after a disaster declaration, the IRS posts Notices and News Releases (https://www.irs.gov/newsroom/news-releases-for-current-month) on its website describing filing and payment deadline extensions and other tax relief for affected taxpayers. All applicable IRS Notices and News Releases should be read carefully to determine which deadlines are extended, for how long, and for which taxpayers. For all federally declared disasters, installment agreement payments that come due during the disaster are automatically suspended and the taxpayer must resume payments the month after the disaster relief period ends. In some major disasters, the IRS has suspended certain types of collection actions, including liens, levies, and seizures.
Disaster survivors will need quick access to prior year tax returns to file amendments to claim disaster losses in a prior year as allowed under 26 U.S.C. § 165(i), to prove business income for business interruption insurance claims, or for any number of other disaster-related exigencies. The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns and tax return transcripts. The IRS provides (see https://www.irs.gov/newsroom/tax-relief-presidentially-declared-disaster-areas-1) that survivors in Presidentially-declared disaster areas should write the assigned Disaster Designation (e.g., “North Carolina, Hurricane Florence”) in red ink across the top of Form 4506 Request for Copy of Tax Return (https://www.irs.gov/pub/irs-pdf/f4506.pdf) or Form 4506-T Request for Transcript of Tax Return (https://www.irs.gov/pub/irs-pdf/f4506t.pdf), as appropriate, to avoid fees and expedite processing. Free transcripts can be requested online at https://www.irs.gov/individuals/get-transcript or by mail.
Taxpayers claiming disaster losses on amended tax returns under 26 U.S.C. § 165(i) who need access to immediate cash refunds should write the Disaster Designation in red across the top of Form 1040-X Amended U.S. Individual Income Tax Return (https://www.irs.gov/forms-pubs/about-form-1040x) to ensure the IRS applies expedited processing procedures. The average expedited processing time is 60 days. Taxpayers experiencing economic hardship should also apply for an expedited refund through the IRS Taxpayer Advocate Service by calling 1-800-929-1040 (TTY 1-800-829-4059) or visiting https://www.irs.gov/taxpayer-advocate and https://www.taxpayeradvocate.irs.gov/get-help/refunds/expediting-a-refund/. An expedited refund can generally be processed within one to two weeks.
Qualified disaster relief payments under 26 U.S.C. § 139 are not taxable income to disaster survivors so long as the payment does not relate to a loss that has also been reimbursed by insurance and has not been deducted in a prior year. Qualified disaster relief payments include payments to reimburse reasonable and necessary personal, family, living, or funeral expenses incurred as a result of the disaster, reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence (including rentals), and expenses incurred to repair or replace contents of a personal residence. Section 139 also provides that payments made by a federal, state or local government or agency or instrumentality thereof in connection with a disaster in order to promote the general welfare are also considered qualified disaster relief payments.
Many disaster survivors have lost some or all of their records in the disaster. In such situations, taxpayers will need to reconstruct records or collect other documents adequate to prove eligibility for tax deductions and credits, apply for federal disaster assistance, and substantiate insurance reimbursement claims. The IRS website provides information about reconstructing tax records (https://www.irs.gov/newsroom/reconstructing-records-after-a-natural-disaster-or-casualty-loss) while Publication 2194 (https://www.irs.gov/pub/irs-pdf/p2194.pdf) provides additional information on how to reconstruct records after a disaster.
IRS computer systems automatically identify taxpayers located in covered disaster areas and apply automatic filing and payment relief. Taxpayers who reside or have a business outside the covered area, or who moved to the covered area after their last contact with the IRS, must call the IRS disaster hotline at 1-866-562-5227 to request tax relief.
Finally, the IRS staffs a Disaster Assistance Hotline at 1-866-562-5227 on weekdays from 7:00 a.m. to 7:00 p.m., local time. Callers may need to provide their own interpreter and should be prepared to provide their FEMA Disaster Number, retrievable at https://www.fema.gov/disaster.
7.3 – Frequently Asked Questions: Banking and FDIC Issues
Q 7.1 – Who can I contact for information?
Affected bank customers with access to a working telephone can contact the Federal Deposit Insurance Corporation (“FDIC”) at 1-877-275-3342 (TTY 1-800-877-8339) for information about accessing their bank accounts, lost records, ATM cards, direct deposits or how to reach their bank. This line operates from 8:00 a.m. to 6:00 p.m. Eastern Time Monday through Friday and 8:00 a.m. to 1:00 p.m. on Saturday. These hours were extended during Hurricane Florence and may be extended again in response to disasters. Customers with access to the internet may visit the FDIC website at https://www.fdic.gov/consumers/assistance and can submit inquiries or complaints about financial institutions at https://ask.fdic.gov/fdicinformationandsupportcenter/s/
Q 7.2 – Your client has relocated due to the disaster. Will local banks cash their checks if they are not customers of that bank?
If your client does not have an account relationship with the bank, the bank may be concerned about whether there are sufficient funds in your client’s account. Ask the bank that your client is dealing with to call his or her bank to determine his or her account balance. The FDIC encourages working with the bank to provide the necessary information to the bank your client is now dealing with so your client can conduct banking transactions. However, the FDIC recognizes that your client may have no other alternative but to open a new banking account in the area in which your client has relocated.
Q 7.3 – Your client’s direct deposit is not showing up in his or her account, and he or she needs money. Is there somebody who can help your client clear this up with the bank?
There may be delays in the processing of transactions, including direct deposits, as banks activate back-up plans. The banks will process the transactions once these plans are implemented. Tell your client to talk to their bank about his or her problem. Your client also can contact the individual or company that originated the deposit to determine if they have information about the status of your client’s deposit.
Q. 7.4 – If your client’s ATM card does not work, what should your client do?
If your client’s ATM card will not work, it is probably because your client’s bank’s verification system is not operational. Your client may consider other options, such as cashing a check in his or her immediate area or using a credit card. Your client may also contact one of the emergency service organizations, such as FEMA (www.fema.gov; 1-800-621-3362; TTY: 1-800-462-7585) or the Red Cross (https://www.redcross.org/get-help.html); 1-800-733-2767, or contact a non-local branch office of your client’s bank to request assistance.
Q. 7.5 – Your client is concerned about ATM fees increasing as your client doesn’t have access to his or her bank’s ATM network but needs cash due to hurricane-related issues. Who do I contact regarding this concern?
Please instruct your client to contact his or her bank and explain the situation. The FDIC strongly encourages banks to waive these fees for those hardest hit due to disasters.
Q. 7.6 – How will your client get his or her Social Security check?
Contact the SSA or go to any open Social Security office for instructions or information regarding SSA assistance programs. To find an open office, call the SSA at 1-800-772-1213 (TTY 1-800-325-0778) for automated services and recorded information. If you cannot handle your business through an automated service, you can speak to a live representative between 8:00 a.m. and 7:00 p.m. Monday through Friday. The FDIC encourages banks to assist impacted customers by honoring (after reasonable verifications) handwritten or typewritten Social Security checks. Information from the SSA is available at: https://www.ssa.gov/emergency/.
Q. 7.7 – Your client can’t reach his or her bank by phone or internet. What should I do?
Some branches in heavily storm-damaged areas may not be open for some time. You can use the FDIC’s Bank Find Suite at https://research.fdic.gov/bankfind to obtain a bank’s contact information. Your client may also can contact an emergency service organization, for example FEMA (www.fema.gov) at 1-800-621-3362 (TTY: 1-800-462-7585) or the Red Cross (https://www.redcross.org/get-help.html) at 1-800-733-2767, or contact a non-local branch office of your client’s bank to request assistance.
Q. 7.8 – Your client would like to wire money to a relative or friend affected by the disaster or would like to wire money from a current institution to another institution located nearer to the client’s current location. How does your client go about doing this?
Find a bank’s telephone number, email address, and physical address on the FDIC’s Bank Find Suite at https://research.fdic.gov/bankfind. Contact the institution to which your client wants to send or retrieve money and determine if the bank can accept or send wire transfers. Then provide either (1) your client’s account number or (2) the account number of the individual who will receive the money (found in the middle of a check or deposit slip), and the bank routing number (found on the lower left hand corner of a check or deposit slip). Also provide the address of the bank to which you are wiring money. Request the institution to fax or email your client a confirmation so your client will know when the person receives the money, if you are transferring the funds over the internet.
You should understand the identification verification process at the receiving institution. Some institutions will accept incoming wires for non-customers but will require proof of your client’s identity before they release the funds. Ensure your client has the identification required or explain up front what your client has and ask the bank if that is acceptable. Also, determine up front the existence of any fees associated with wiring funds.
Q. 7.9 – How can you protect your client against fraud or scams?
Instruct your client to protect personal and financial information. Understand that some people may take advantage of natural disasters by using fraudulent websites, phone calls, emails and text messages claiming to offer “help” but may be trying to trick people into providing social security numbers, bank account numbers and other valuable details. Instruct your client not to divulge his or her bank or credit card numbers or other personal information over the phone unless your client initiated the conversation with the other party and your client knows that it’s reputable. Instruct your client to be on guard against imposters who contact your client claiming to be government employees or volunteers and who ask for personal financial information or money. Instruct your client to reject offers to cash a check for someone in exchange for a fee, even if the bank makes the funds available to your client right away, as it may later turn out that the check was fraudulent.
Instruct your client to be careful before accepting unsolicited offers of repairs or other assistance. Instruct your client to deal only with licensed and insured home-repair contractors and get recommendations from people your client knows and trusts. To consider a local business, including complaints against it, first contact the North Carolina Attorney General’s office (https://www.ncdoj.gov/ or by phone at 1-919-716-6400 or your client’s state or local consumer affairs office. In addition, instruct your client to get prices and other key details in writing and to take time to read and understand anything the client is asked to sign.
Q. 7.10 – Your client is worried about ID theft.
If your client feels identity theft is a concern, or has reason to believe he or she may be a victim of identity theft, your client may place a fraud alert (https://www.consumer.ftc.gov/articles/what-know-about-credit-freezes-and-fraud-alerts) or freeze on his or her credit file by contacting the fraud department at one of the three major credit bureaus:
Equifax
1-888-298-0045 (credit freeze) Mon-Fri 9 a.m. to 9 p.m. and Sat-Sun 9 a.m. to 6 p.m. ET
1-800-525-6285 (fraud alert) Mon-Fri 9 a.m. to 9 p.m. and Sat-Sun 9 a.m. to 6 p.m. ET
https://www.equifax.com/personal/
P.O. Box 740241
Atlanta, GA 30374
Experian
1-888-397-3742
https://www.experian.com/
P.O. Box 9554
Allen, TX 75013
Transunion
1-800-680-7289
https://www.transunion.com/
Transunion Fraud Victim Assistance
P.O. Box 2000
Chester, PA 19016
Placing a “fraud alert” on your client’s credit file can help prevent a thief from opening new accounts or making changes to your client’s existing accounts. Be aware, however, that placing an alert on your client’s credit file also may prevent him or her from opening an account unless the bank can contact your client and positively confirm his or her identity.
In addition, if your client thinks their personal information has been misused, they should contact the local police. They also can contact and file a complaint with the Federal Trade Commission by phone at 1-877-438-4338 (TTY 1-866-653-4261) or at www.identitytheft.gov/.
As always, instruct your client to protect his or her Social Security number, bank account and credit card numbers, and other personal information, especially in response to unsolicited requests from strangers. Fraudsters may try to trick your client into divulging personal information, or they may steal sensitive mail or documents from homes and offices.
Q. 7.11 – The disaster forced your client to evacuate without ID or financial records. How does your client rebuild his or her financial records?
A state-issued ID card (or driver’s license) is the most commonly used proof of identity. Replace these as soon as possible at the North Carolina Department of Motor Vehicles (https://www.ncdot.gov/dmv/Pages/default.aspx). Replacing a Social Security card requires another form of identification, such as a driver’s license. Call the SSA at 1-800-772-1213 (TTY 1-800-325-0778) or visit https://www.ssa.gov and select Get or replace a Social Security card.
Consider replacing other documents that may serve as proof of identity, such as a passport, employer ID card, school-issued ID, military ID, marriage or divorce record, adoption record, health insurance card (excluding Medicare), or a life insurance policy.
Replace your client’s credit cards, debit cards, and checks. Inquire about your client’s safe deposit box. Contact your client’s financial institution. Your client can call the FDIC’s toll-free number at 1-877-275-3342 for bank contact information. Once connected, your client’s financial institution should explain the process for replacing your client’s cards, checks, and financial records. If your client kept documents in a bank safe deposit box, your client may want to inquire if the boxes are intact. Your client also can contact their credit card issuer:
American Express
1-800-528-4800
http://americanexpress.com/us/help/lost-stolen-card.html
Discover
1-800-347-2683
https://www.discover.com/credit-cards/help-center/faqs/lost-stolen.html
MasterCard
1-800-627-8372
https://www.mastercard.us/en-us/personal/get-support.html
Visa
1-800-847-2911
https://usa.visa.com/support.html/
If your client does not remember the number or issuer of all credit cards owned, the client can obtain his or her credit report from one of the three major credit bureaus listed above under Section 7.10. Your client’s credit report should list all credit cards in his or her name and a copy of this information must be provided to your client at no cost under federal law. For details, contact a central service set up by the credit bureaus at 1-877-322-8228 or visit https://www.annualcreditreport.com/index.action.
Q. 7.12 – If your client’s local bank was destroyed, is your client’s money still insured?
Yes, your client’s money is insured by the FDIC. Deposits with a FDIC-insured bank or savings institution will continue to be protected up to $250,000. However, your client should keep any financial records to help reconstruct the accounts.
Q. 7.13 – Will there be enough cash?
The Federal Reserve System has and will continue to meet the currency needs of the banking industry. Be assured that sufficient resources are available to cover any shortfall.
Q. 7.14 – What about the contents of your client’s safe deposit box? Does FDIC insurance cover safe deposit boxes?
No, deposit insurance does not cover the items contained in safe deposit boxes. Safe deposit boxes are not immune from theft, fire, flood, and loss. Most safe deposit boxes are held in the bank’s vault, which are fire and water resistant. If possible, contact the appropriate bank branch or office to determine the condition of your client’s box.
Q. 7.15 – Is your client’s bank safe? Do you believe the affected banks will survive?
We are not aware of any bank that has closed due to the impact of a natural disaster. Consumers can also rely upon the guarantees provided by the FDIC, which oversees the insurance funds that back deposits in banks and thrifts, and the National Credit Union Share Insurance Fund, which protects credit union depositors. These depositors can rest assured that deposit insurance is in full force.
Q. 7.16 – Merchants will not accept my client’s checks because his or her bank is not operational and they cannot verify my account balance. What should I do?
If a merchant cannot verify that your client has an available balance, it is unlikely that they will accept your client’s check. Until your client’s bank is operational again, we can only suggest that you contact one of the emergency service organizations, such as FEMA (www.fema.gov) at 1-800-621-3362 (TTY: 1-800-462-7585) or the Red Cross (www.redcross.org) at 1-800-733-2767.
Q. 7.17 – Your client is no longer working due to the disaster and doesn’t have the income to live on and meet his or her payments. If your client misses some mortgage payments, how will this affect his or her credit? Will he or she be charged late fees? What can your client expect?
The lender can file for foreclosure on your client’s home. Your client will receive a written foreclosure notice. Nonpayment may also be reported to credit agencies that will seriously affect your client’s ability to rebuild his or her life. If the insurance settlement is less than what your client owes on his or her mortgage, your client is still responsible for paying the difference.
There is no law that requires a mortgage lender to offer your client special consideration for late or missed payments, even if your client is experiencing financial hardship following a disaster. Lenders make accommodations on a case by case basis. If your client can’t make his or her payment, contact his or her lender or loan servicer as soon as possible to discuss your client’s situation and see if you can make a temporary deal on your client’s payments until his or her financial situation improves.
Tell the lender or loan servicer that your client has been affected by a disaster. Let them know if his or her county has been declared a state and/or federal disaster area. Ask for “forbearance.” By granting forbearance, the loan servicer can defer mortgage payments, waive late fees, and not report your client to the credit bureaus. Your client has no legal right to forbearance; you must ask for it. It is not automatic, and the lender does not have to approve it. Ask that any late fees be reversed. Be sure your client understands what the forbearance will include.
Ask the lender or loan servicer: How many months’ payments will you postpone? Will the lender or loan servicer impose any fees for the payment deferral? When will the deferred payments be due? Will the missed payments be repaid over a long time rather than all at once? Will the lender stop any negative credit reporting for the deferred payments? Get all lender promises to you in writing.
Q. 7.18 – Does your client have to pay the mortgage while his or her insurance claim is pending?
Yes. Your client is responsible for paying his or her mortgage while his or her insurance claim is pending unless your client has received forbearance (see above). Your client’s homeowner’s policy may provide living expenses while your client’s home is unlivable and under repair. If your client’s claim was approved and repairs are underway, your client must pay your mortgage as usual.
*IMPORTANT: Your client is not required to accept the first estimate or offer of payment from your insurance company. Do not rush the process. It is important to make sure that your client will be paid enough to adequately cover your client’s losses. Ask your client’s insurer to reconsider the offer. Include written estimates to show the real cost of repairs, and negotiate the best deal. Your client can also hire an independent insurance adjuster who is not employed by your client’s insurance company, but keep in mind that these adjusters get paid based on a percentage of your client’s recovery.
In the meantime, instruct your client not to:
– Rush to sell his or her property because he or she is financially desperate. Financial help may be available from sources that your client doesn’t know about yet.
– Fall for scam artists who promise to save his or her property from foreclosure for a fee, or if your client “temporarily” signs his or her property over to them.
– Borrow money-especially from contractors-to rush into home repairs. Instruct your client to work with his or her insurance company to get an accurate estimate and payout for his or her claim.
– Rush into declaring bankruptcy. Bankruptcy can damage your client’s credit for years to come. Instruct your client to get credit help from his or her local nonprofit consumer credit counseling service.
Q. 7.19 – What if my client’s home is destroyed and he or she has no insurance?
Your client may be able to deduct some of his or her loss on his or her federal income tax return. Only major losses normally result in tax savings. Check on the IRS web page at www.irs.gov or call your client’s local IRS office.
Q. 7.20 – Your client needs longer term financing until insurance checks come in and can find another job. Will banks help?
Federal Disaster Loans: Following a disaster declared by the president, FEMA partners with the U.S. Small Business Administration (“SBA”) to help disaster survivors. The SBA offers low-interest disaster loans to homeowners, renters and businesses of all sizes. These are federal long-term disaster recovery loans designed to help you repair physical damage caused by a disaster that is not fully covered by private insurance or other disaster funds.
What is covered? The SBA’s programs do not duplicate FEMA or other disaster recovery programs. If your client doesn’t apply to the SBA, your client may lose out on additional help such as:
– reimbursement for lost personal property
– vehicle repair or replacement
– moving and storage expenses
Who is eligible? Eligibility includes:
– businesses of all sizes
– landlords
– individual homeowners and renters
– private nonprofit organizations
– small agricultural cooperatives
Can your client get a loan to pay his or her business operating expenses? Economic Injury Disaster Loans (“EIDL”, https://www.sba.gov/funding-programs/disaster-assistance/economic-injury-disaster-loans) are available from the SBA for businesses that have “substantial economic injury”, meaning the business is unable to meet its obligations and to pay its ordinary and necessary operating expenses. EIDLs provide working capital to help small businesses survive until normal operations resume after a disaster. A business may qualify for both an EIDL and a physical disaster loan.
How does your client apply? Register by phone through FEMA at 1-800-621-3362 or online through www.DisasterAssistance.gov. If your client is eligible for an SBA loan, the SBA will contact your client by an automated callback to complete the SBA application. Your client can also apply at his or her local Disaster Relief Center.
How much can your client borrow?
– Eligible homeowners – up to $200,000 for home repair or replacement of primary residences
– Eligible homeowners and renters – up to $40,000 to replace disaster-damaged or destroyed personal property
– All businesses regardless of size – up to $2 million to cover physical damages
– Small businesses and most private nonprofits – up to $2 million for any combination of property damage or economic injury under SBA’s EIDL program. SBA loans offer terms up to 30 years. Interest rates will not exceed 4 percent per year.
– For further details, see https://www.fema.gov/press-release/20210122/its-important-submit-sba-disaster-loan-applicationApplication Deadlines: Deadlines vary depending on the type of loan. Apply immediately. Do not wait to hear back on claims submitted to your client’s insurance company.
For more information: Contact the SBA’s Disaster Assistance Customer Service Center at 1-800-659-2955 (TTY 1-800-877-8339) or by email disastercustomerservice@sba.gov. Visit the SBA website at www.sba.gov/disaster.
Q. 7.21 – Your client is no longer working due to the storm and doesn’t have the income to live on and meet his or her payments. If your client misses some loan payments, how will this affect your client’s credit? Will your client be charged late fees?
The FDIC encourages banks to be understanding during times of disaster and work with customers seriously affected. In certain situations, the FDIC asks banks to allow customers to skip loan payments with no adverse consequences for the borrower, extend loan terms, and restructure loans. However, before skipping payments or changing the terms of the loan, contact your client’s bank to determine its flexibility.
Q. 7.22 – Your client needs financing until insurance checks come in and your client can find another job. Will banks help?
Not all banks provide unsecured loans, but the FDIC has encouraged banks to consider working constructively with affected consumers to meet their lending needs.
Q. 7.23 – What happens if your client’s bank has lost his or her records?
Banks are required to have contingency plans for disruptions to operations, including natural disasters. Banks have backup record systems housed in safe locations to ensure financial records can be reconstructed and restored.
Q. 7.24 – How can customers deposit or cash insurance checks?
By the time emergency relief and insurance payments are received, the affected institutions should be prepared to process payments for their customers. Should a customer’s primary financial institution not be able to receive these payments, it is anticipated arrangements will be made with neighboring institutions to process these payments.
Q. 7.25 – Your client is not a customer of any of the local banks that are operational. Will another bank cash your client’s FEMA or insurance check?
It depends on the operational banks’ policies and procedures for honoring checks presented by non-customers, which may consider the form of identification your client can provide and the type of check, as follows:
– FEMA Checks. If an operational bank finds your client’s form of identification acceptable, it may be willing to honor your client’s FEMA check due to such checks having special security features that distinguish them from other checks.
– Insurance Checks. If an operational bank finds your client’s form of identification acceptable, it may be willing to consider honoring your client’s insurance check on a case-by-case basis.
Q. 7.26 – What are other tips to start the recovery process?
Report property damage to your client’s property insurance company or agent as soon as possible. Instruct your client not to throw away damaged goods or make major repairs until a claims adjuster visits his or her residence. Also keep receipts for emergency repairs.
– Look into federal assistance for survivors of natural disasters. This may include special loans for homeowners, small business owners or farmers to use to repair or replace damaged property. Visit https://www.disasterassistance.gov/ to learn more. You can also call FEMA at 1-800-621-3362 (TTY 1-800-462-7585).
– Immediately contact your client’s creditors if your client doesn’t think he or she can pay his or her bills or make credit card or loan payments on time. Your client paying his or her debts late or not at all can result in penalties, interest charges and damage to your client’s credit score. Your client’s creditors likely will work with you on a solution, but it’s important to contact them as soon as possible and explain your client’s situation.
– If your client has additional concerns or a complaint with a business such as a financial institution or an insurance company, be proactive. First contact the firm directly. If that doesn’t produce the desired results, your client may contact the appropriate federal or state regulatory agency for help or guidance.Seek help from non-profit organizations in your client’s area. Their financial assistance programs may include services such as counseling, free legal assistance, and low-interest business loans.
End Notes
(1) Disability for purposes of claiming Social Security benefits is defined as the inability to engage in substantial gainful activity (“SGA”) by reason of any medically determinable physical or mental impairment which can be expected to result in death or has lasted or expect to last for a continuous period of at least one year. Determining whether an applicant is unable to engage in SGA is a fact-specific analysis as to the degree to which the applicant’s disability prevents him or her from participating in gainful employment. The applicant will be deemed to engage in SGA if applicant earns above a certain amount from working. There are additional conditions, benefits and considerations for individuals who are blind, as defined by relevant SSA rules, regulations and administrative decisions.
(2) For requirements for accelerated disaster loss deductions, see 26 U.S.C. § 165(i) and 26 C.F.R. § 1.165-11 (2019).