Priorities and Assistance
Your first priority is to keep yourself and your family healthy and safe. Most public health officials are recommending having a 2-week supply of food and medicine for your family (and pets!). Remember that we all are in this together so please don't hoard more than you need. If you need to use credit cards to buy necessities because you have had an interruption or reduction of income, then do so: no one expects you to forego food, medicine, or shelter.
If you or a loved one gets sick, or if you are laid off, furloughed, or have your hours reduced as a result of the pandemic, the State of California has authorized the EDD to immediately provide disability and unemployment benefits. You can apply for benefits at the EDD website. (https://edd.ca.gov/about_edd/coronavirus-2019.htm)
Although all public school classes have been suspended, many schools remain open to provide free lunch to children 18 years and younger, no questions asked. The San Diego Union-Tribune is maintaining a list of locations. https://www.sandiegouniontribune.com/news/education/story/2020-03-14/heres-where-you-can-find-free-meals-for-children-during-this-weeks-school-closures
It now appears that the IRS has announced that 2019 taxes will not have to be paid until July 15, 2020. Federal tax returns are still due on April 15; the extension is only for the payment of any taxes owed. The state of California has extended the due date for returns and payments to June 15, 2020. Please confirm any changes with your tax professional.
Your Actions Should be Proactive and Cautious
I understand that many people and businesses will have their finances significantly disrupted by this emergency, and that as a result they may be unable to maintain payments on their debts. It may be that bankruptcy will be a part of the solution to these financial difficulties. However, future developments are still very difficult to predict. The Federal, State, and Local governments are providing various services and assistance that may address any temporary concern. It’s important to keep options open while we wait and see how events develop.
Don’t ignore warning signs. If you are not going to be able to pay all of your bills, be proactive and reach out to creditors. Auto lenders, mortgage servicers, student loan creditors, credit card companies, and utility companies are all instituting programs in response to the present emergency. Reach out to them and ask for forbearance. Keep these communications in writing! It might be extremely important to have a record of any promises a lender or creditor has made to you.
Regarding Your Mortgage: If you believe that you are going to have difficulty paying your mortgage, reach out to your servicer. Search the name of your mortgage servicer with the words "loss mitigation forbearance". I encourage you to begin this process as soon as you have concerns - in the best of times these departments are slow to respond so I would expect them to be under high load now. be prepared to provide copies of bank statements and tax returns.
Your retirement accounts are a last resort! Please think very carefully before withdrawing from or borrowing against an IRA, 401(k), or similar retirement account. Once that money is spent, it is gone, and it may take years to rebuild that nest egg. Any withdrawals might have tax consequences down the road, costing you even more money. Additionally, money in these accounts is almost always completely protected in the event that you file for bankruptcy. If you think there is any chance that you may file for bankruptcy in the future, please contact me before risking your retirement funds.
Links to Relief Programs and Information
- Coronavirus Car Payment Relief Programs
- Coronavirus Credit Cards Relief Programs
- Government Disaster Assistance
Foreclosure Protection for Loans Funded Under Certain Federal Programs
You may be protected from foreclosure if your loan is funded through certain Federal programs:
- Fannie Mae and Freddie Mac have easy loan look-up websites to determine if they own a mortgage. See https://ww3.freddiemac.com/loanlookup/ and https://www.knowyouroptions.com/loanlookup#.
- To determine if a loan is FHA-insured, look for an FHA case number on the mortgage document, specific language in the mortgage and note forms, or through the payment of an FHA premium on the mortgage statement. In some cases, unfortunately, loans may have been stripped of their FHA-insured status; call HUD’s National Servicing Center at 877-622-8525 to confirm.
- A VA-guaranteed loan also has specific language in the note and mortgage identifying it as a VA loan, and there are fees paid to the VA noted in closing documents.
If your mortgage is covered under any of these, please let me know.
Expected to be Signed Into Law Very Soon
Mortgage Servicers for Federally Backed Mortgages are required to allow for a 60 day suspension of payment obligations upon representation by the borrower that the virus crisis has impacted their ability to pay. Unfortunately it is not clear if this applies to loans that were in default prior to the present emergency.
Mortgage Servicers for Federally Backed Mortgages are required to agree to forbearance of up to 12 months or longer without adding additional fees, penalties or interest other than that contemplated by the original note.
Servicers of Federally Backed Mortgages are prohibited from moving forward to foreclose or evict anyone from now until May 17, 2020.
See "Foreclosure Protection for Loans Funded Under Certain Federal Programs" paragraph above to determine if your loan is federally backed.
Payments on Federal student loans will be suspended for six months and no interest, penalties or fees will accrue. These non-payments will be treated as payments for the purposes of forgiveness or loan rehabilitation or for those enrolled in public service loan forgiveness.Unfortunately Private Student Loans are not subject to these rules.
Workers who apply for unemployment will receive higher payments more in-line with what they were making while working.
The Small Business Administration has been authorized to provide loans to cover payroll, rent, health insurance, sick pay and other day to day expenses over the next 8-10 weeks. The loan is forgivable if you keep your employees on the payroll. Banks will originate and service the loans and the Government will subsidize them through the SBA.
The stimulus checks every consumer is about to receive will not be considered income for purposes of filing a Bankruptcy.
People already in a confirmed Chapter 13 Plan will be allowed to file a Motion to Modify their Chapter 13 based on financial issues caused by COVID to extend the term of their plan for up to 7 Years.
San Diego County Moratorium on Evictions
On Tuesday, March 24th the San Diego County Board of Supervisors has issued a moratorium on evictions if a tenant is unable to pay rent due to the COVID-19 emergency. This resolution applies to both commercial and residential properties. Tenants have 15 days to notify their landlord in writing that they will be unable to pay their rent due to a loss of income that is caused by the pandemic. Tenants will need to provide proof of financial impact. Rent will become due again on June 1, or the tenant can extend the rent moratorium for one more month with proof of continued hardship. Afterwards, the tenant will have 90 days to pay the past-due rent.
Gov. Newsom Announces 90-day California Mortgage Payment Grace Period
On Wednesday, March 25th Gov. Gavin Newsom announced that Wells Fargo, Citibank, JPMorgan and US Bank had agreed to a 90-day grace period on mortgage payments in California. Read more about this announcement in the San Francisco Chronicle article.
Governor Newsom Institutes a Statewide Moratorium on Evictions for 60 Days
On Friday, March 27th California Governor Gavin Newsom has instituted a statewide moratorium on evictions for 60 days. If you will be unable to pay your rent due to the COVID-19 emergency, you must notify your landlord IN WRITING AS SOON AS POSSIBLE. You may be required to prove that your inability to pay rent was due to the present emergency, and you will need to get caught up at some point.
I remain open for business and I am continuing to process cases. Please understand that as a result of the present emergency some matters require additional priority and effort. Please be patient with any delays and be assured that I will continue to serve you and your case needs in an appropriate timely fashion.
Please Note: As of March 16, 2020, all "341 Meetings" scheduled prior to April 10, 2020 have been postponed. New dates have not been set at this time. I will provide additional information as soon as it is available.
If you are presently in a Chapter 13 and expect you are going to be unable to make your plan payment, please contact me immediately so that we can make appropriate arrangements.
Take care of yourself, your family, your friends, and your neighbors. Stay safe and stay healthy.