As we all deal with the health and public safety issues relating to the spread of Coronavirus (COVID-19), there is little doubt that the economic impact may include unemployment rates of 20% and a surge in delinquent consumer debt. Debt experts have called for a rapid and immediate solution to what is likely an emerging crisis. While we all focus our attention on ensuring the safety of ourselves, family, friends and neighbors, COVID-19 will have lasting impacts on New Jersey consumers and homeowners.
Financial Impact on Consumers
Consumers who are employed will need to devote their income to spending on their day-to-day necessary expenses and may face reduced pay or changes to their expenses. Those who are already or become unemployed will need to live off savings and benefits and fact the potential for loss of their homes during the crisis. The retired or soon-to-be retired have felt the impact of the massive losses in the stock market.
CALLS FOR NATIONAL COLLECTION MORATORIUM
As the federal government has enacted a moratorium on foreclosure actions and other measures designed to avoid loss of homes during the crisis, debt experts are calling for a similar federal bar on collection of outstanding debt.
“A national collection moratorium is a stimulus measure: it has the effect of immediately injecting cash into the economy in that it allows people and businesses to shift funds from debt service obligations to other consumption. It’s basically a giant forced loan from creditors to debtors. And it happens immediately, without any administrative apparatus. There’s nothing else that will have such a big effect so immediately. Congress should move on moratorium legislation asap as a stand-alone bill to buy”
BANKRUPTCY OPTIONS INCLUDING CHAPTER 13 BANKRUPTCY
These issues are sure to have future damaging impact in the loss of savings and potentially homes during the crisis and a rise in bankruptcy filings. While a moratorium on foreclosure and debt collection would avoid an urgent crisis, the delay alone is unlikely to avoid the future consequence of the debt.
In fact, the proposal for a national moratorium on debt collection, only amplifies the debt relief provided by Chapter 13 Bankruptcy and other forms of relief under the bankruptcy code. A moratorium does not eliminate or even reduce the debt already owed. While no repayment is required, it will ultimately become due in some fashion.
Legal proceedings like a Chapter 13 bankruptcy have provided relief to many consumers and homeowners during and after prior financial crises and recessions. More importantly, our bankruptcy attorneys have found that just a simple consultation is enough to inform our clients of their options. During the decade it took to recover from the last recession, we were able to assist New Jersey families and homeowners find solutions to their debt problems. We encourage anyone struggling with those issues now or at any time to please consider a free case review to know your rights and options.
Center For Disease Control (CDC) Guidelines To Protect Yourself
- The best way to prevent illness is to avoid being exposed to this virus.
- Clean Your Hands Often. Use soap and water for at least 20 seconds or a hand sanitizer with at least 60% alcohol.
- Avoid touching your eyes, nose, and mouth with unwashed hands.
- Social Distancing. Avoid close contact with people who are sick and try to avoid close contact (6 feet) from other people.
- If you are sick, contact your physician, stay home except to get medical care.
- Cover your mouth and nose with a tissue or inside of your elbow if you cough or sneeze. Throw used tissues in trash and immediately wash hands after.
- Clean and disinfect frequently touched surfaces daily.
- Maintain contact by phone, email or text message with family, especially older family/friends.