The coronavirus has us locked at home where the worry demons play unrestrained in our heads.
Money troubles cause us worry, in “good” times. These are hardly good times.
As more and more of us are hit with shelter-in-place orders that keep us from work and our kids from school, we have even more time to worry about money.
And worry is debilitating. In normal times, stress kills and the stress of COVID-19 dwarfs our usual worries.
I live and practice bankruptcy law in the San Francisco Bay Area: here, we’ve been subject to social distancing, strategic shutdowns, and now, shelter-in-place orders for longer than most areas.
So here’s what I know and what I expect as a bankruptcy lawyer about the economic spillover from the fight against this virus.
Focus on the here and now
Staying safe and healthy right now is all that really matters. Set aside issues of paying existing bills and long term commitments. Those can wait.
Make food, medicine, and mental health your first concern.
If in doubt about your readiness for a jobless stretch, set aside, for the moment, payments on credit cards, medical bills, and student loans.
If possible, consider paying insurance premiums and car loans.
The very crisis that keeps you from your job keeps your creditors from their jobs, too. While we’re still getting collection calls at my office, like most collector calls, they are toothless.
You are not alone
We see the usual money troubles as unique to ourselves: shameful, defeating, personal.
Well hello, this time that isn’t so. (It wasn’t so before, but that’s another rant.) Millions of people in this country are facing the same situation.
Which is what feeds my expectation that government will craft remedies that mitigate the damage the country faces. And once those remedies start rolling out, we’ll all have opinions about the fairness and the adequacy of the remedy.
That grousing will give us something more to do.
But collectively, we all see the problem. The problem is shared. Your financial struggles will not stand out.
The help that’s coming
Lots of ideas are circulating about protecting families financially and pasting the economy back together.
For the longer haul, remedies under discussion include
- Bans on evictions, foreclosures, and utility shutoffs
- Restrictions on negative credit reporting
- Mandated extensions of repayment on existing debt
- Partial or total forgiveness of student loan debt
- Low cost loans or grants for small businesses
- Penalty-free late payment of income and employment taxes
Individual companies have offered free or reduced rate internet access; free online books and courses; on line exercise classes; and the list goes on.
Time will tell just what the collective remedies look like. But, rest assured, the crisis demands a fix.
And an election upcoming provides a feedback mechanism if the fix is slow, skimpy or spotty.
In the best of times, legal actions take time. So there is little immediate danger to you and yours in holding off payment on unsecured debts. Don’t worry that the legal ax is about to fall if you miss a payment.
Law suits are expensive for the creditor and are typically the last resort of collectors. Don’t fret that your unpaid bills will find you in court in the short run. Where I am, the courts are barely open for much at all.
More concerning are the secured creditors with collection options that don’t require a judge’s involvement. Think car repossessions and non judicial foreclosures.
If you can’t make your car payment, call AND write the lender and tell them how you are affected by the COVID-19 crisis and ask for relief. I seriously doubt that, at the moment, creditors have a corporate answer to your request, but ask anyway.
And I never count on a phone call alone to make a record, much less make a difference to a creditor corporation. Send a letter too and keep a copy.
I expect, but have not seen yet, a policy of tolerance on the part of car creditors. What would they do with a fleet of repossessed cars? We can hope their repo guys are subject to stay at home orders, too.
As to foreclosures, there are glimmers of action to bar foreclosures while we are fighting the virus. Residential lenders with loans guaranteed through Fannie Mae and Freddie Mac have been ordered to offer borrowers flexibility. Stay tuned to see how that works out.
If your loan is not Fannie/Freddie, write the lender seeking relief, and stay watchful for developments. Again, I don’t think lenders want to end up owning gobs of foreclosed homes.
Reach out and band together
It’s ironic that, in a time when we’re told to practice social distancing, togetherness is critical. It may be virtual togetherness, but it is good for our individual health and the strength of our communities. Take care of your neighbors.
Stay strong, healthy, and hopeful.
More on the coronavirus crisis and money