How financial institutions deal with the coronavirus will tell us a great deal about what the financial future holds for Americans across the country who work in sectors that are considered “non-essential” for the purposes of this quarantine. Already, a number of businesses such as restaurants, bowling alleys, and other hospitality and recreation centers are feeling the pressure of not having very much income coming in at this time. This has spurred Congress to pass the Families First Coronavirus Relief package which extends unemployment to individuals who have been displaced from jobs during the quarantine. Congress has also considered the notion of suspending rent and mortgages during this period.
So will the coronavirus pandemic actually cause the economic fallout that we’re all expecting? We just don’t know yet.
Millions of Businesses and Consumers Will Default on Debts
Some municipalities have already moved to suspend rent and mortgage payments during the pandemic, but others have only placed a temporary moratorium on evictions and foreclosures. At the end of the pandemic, whenever the quarantine is lifted, tenants or homeowners will need to become current on their payments if they want to stay where they are.
While most are expected to get some leeway during the pandemic, banks that can turn around and make a larger profit off of selling the home rather than renegotiating the mortgage with lenders may do so. This could be sparked by any number of factors in the housing market. What will happen to property values post-pandemic will determine what the banks do.
What Should I Do if I Can’t Pay My Debts?
Most places are allowing Americans a temporary reprieve from certain financial obligations, but there will come a day when the lenders are going to ask for their payment in full. Lenders will probably be willing to renegotiate the terms of mortgages, but what about those who are renting, can’t keep up on their expenses, or are suddenly accruing interest on credit cards to pay bills with no income?
Here, there will be some options. Unpaid bills, credit card debt, medical debt, and other types of “unsecured” debt (which is not backed by collateral like a home or a car) can be discharged in Chapter 7.
What Should I Do if I Can’t Pay My Mortgage?
If mortgage or car payments are what you’re behind on, your first order of business should be to discuss the matter with your lender and determine how willing they are to work with you toward paying the arrearages and keeping up with future payments.
If you really want to keep the home or the car, but your present financial situation is causing you to fall behind on payments, you may be interested in filing under Chapter 13. Chapter 13 would be useful to those who suffered financial hardship during the pandemic, but expect to see their work return once the quarantine has been lifted.
In a Chapter 13 bankruptcy, the arrearages on your mortgage or car are rolled into a lump-sum payment executed over the course of three or five years. This buys you a maximum of five years to repay any arrearages while simultaneously keeping your present and future payments current. Some non-priority unsecured debts can be discharged, but you may have to pay at least a portion of those debts in Chapter 13.
How a Eugene, OR Bankruptcy Attorney Can Help
We don’t know what the financial situation in our country is going to look like in a few months, let alone a year. Congress may pass laws that provide American consumers and businesses some debt relief by statute, there may be changes to the existing bankruptcy code to spur coronavirus relief, or the courts may be flooded with bankruptcy cases. We just don’t know.
If you’re concerned that you won’t be able to make payments on your living expenses, car payments, or mortgage payments, talking to a bankruptcy and consumer debt attorney could help you devise a plan that stabilizes your future. Call Butcher Law Office, LLC today at 541 762-1967 and schedule a free hour-long consultation. We can help you move forward in safety and security.