Is Bankruptcy the Answer to the Corona Virus Financial Distress

Stephen M. Goldberg, PC is a law firm in Green Brook, NJ, and as attorneys who have been assisting clients from Somerset, Middlesex, Union and other Counties in New Jersey in dealing with personal and family financial difficulties for over 20 years  we find ourselves now  receiving numerous calls from people worried about the disastrous effects of the Covid-19 Corona Virus pandemic on their personal finances, their financial security and their ability to protect themselves and their families from financial disaster.  Over the years we have helped people in financial distress by filing either Chapter 7 or Chapter 13 Bankruptcy cases, we have also helped people make debt settlement arrangements and we have worked to stop foreclosures. 

The recent calls are from old clients, new clients and individuals we have never spoken to previously.  All calls have the same  urgency and all callers are asking very similar questions starting with is Bankruptcy is a possible solution for Covid-19 Corona Virus financial problems?  It is our belief and recommendation that Bankruptcy should be considered only after all other avenues for relief have been explored and should not be undertaken without the advice and counsel of an experienced professional.

The questions we are fielding deal with several topics and we offer suggestions and links to sites on the web where you may find useful  and clarifying information–

Rent— The various government levels have imposed a moratorium on evictions which should last for the next several months. The Courts in New Jersey will not entertain an eviction for non-payment of rent during this moratorium period. We are not aware of any current or pending legislation which would excuse or waive missed rent payments accumulated during the pandemic moratorium period. It appears that tenants will have to catch up on all missed rent payments at some future time.  If you will or have missed a rent payment we urge you to contact your landlord to begin to figure out how you will have to cure the missed payments.  Follow this link for more information

Mortgages— The governments have imposed a moratorium on new foreclosure actions being instituted during the next several months. The Courts in New Jersey will not entertain a new foreclosure action during the moratorium period. The Governor of New Jersey has announced that he has reached a gentleman’s agreement with the major mortgage lenders under which each lender will consider a request for forbearance from borrowers. Each lender is free to make what ever arrangements they want to with borrowers. Once again, the missed mortgage payments will not be forgiven, they may be added on to the end of the mortgage or the mortgage lender may require that the be made up immediately after the foreclosure moratorium is ended.  If you have a federally backed loan you can suspend payments for up to a year without penalty if you are facing a financial hardship.   It is unclear what you will have to do about the missed payments at the end of the forbearance period. If you have or will miss a mortgage payment we urge you to contact your lender to explore available options.  Follow this link for more information

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Utilities— Most of the utilities have indicated that they will not shut off service for non-payment during the next several months. Contact your utility provided to try to work out a forbearance agreement. Once again the forbearance agreement only defers the missed payments  to some future period. We are not aware of any programs under which the missed payments will be waived or forgiven.  Follow this link for more information

Car Payments — All of the major automobile financing companies are urging customers who can not make their payments to reach out to the lender and see if a forbearance arrangement can be worked out.  We are not aware that any lender is offering to waive or forgive any missed payments.  Follow this link for more information

Credit cards—  The credit card companies do not have a uniform program for people who can not make their payments.  From TV, print and internet notices it appears that each of the credit card companies is going its own way.  You will need to call the card issuer to see what program is available for you.  Possible arrangements include the waiver of late fees,  short term ability to skip payments and other adjustments.  Speak directly to your  card issuer to see what program they are offering.  To the best of our knowledge none of the card issuers are offering any type of reduction in interest or balance due.   Follow this link for more information

Medical bills—  We have not learned of any uniform practice among hospitals, clinics and/or doctors office as to how they plan to deal with unpaid bills or bills incurred for treatment of Covid-19 treatment.  Call your providers to see what programs each may have available.

Should I consider Bankruptcy—  None of us can be certain when or if things will return to “normal” or what “normal” will look like next week, or next month or next year.  None of us know when businesses will reopen or when we might return to our jobs or even if our jobs will exist.   Some of our callers have been lucky enough to have continued to receive regular paychecks to date but have been advised that the employer will not be able to continue making payments for much longer, others are faced with trying to get by on Unemployment Insurance, and some have no income whatsoever.

Bankruptcy protection is available for people who are overwhelmed by debts and who need the protection of the Bankruptcy Court to shield them from their creditors and to discharge as much debt is legally possible.  Each individuals circumstance is different and we are available to answer your questions and to make recommendations as to whether a bankruptcy filing will get you all or some or the relief you are seeking.

If you have questions about bankruptcy, please feel free to call and speak with one of our attorneys.  You can each us, Stephen M. Goldberg, PC,  at 732-968-2000 or 732-752-8834.

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