Large parts of the country are shut down in an effort to try to control the Covid-19 Pandemic. The impact on our economy will be breathtaking. It will devastate businesses. Families will be pushed to the edge of their financial health. Many businesses and individuals will not be able to financially recover and will be left with no choice but to seek the protection of the bankruptcy court.
Do You Live Paycheck to Paycheck?
Right now, as I write this, Michigan has been placed under a “stay at home” executive order. People are definitely hurting financially. Most Americans live paycheck to paycheck and have little or nothing in the way of a rainy day fund, let alone enough to survive a global pandemic! While people right now are struggling financially, the brunt of it won’t be felt until later on.
The Calm Before the Storm
Currently, people may not be feeling pressure from their creditors because court proceedings have been placed on hold, people are not being evicted and many mortgage companies are not foreclosing. This will all come crashing down when the creditors no longer have to hold back. Imagine the impact on you if you were required right now to make mortgage payments with money that you don’t really have, that you really need for food, utilities and healthcare. For every person out there who is not making a mortgage payment right now there is a mortgage company who is not receiving those mortgage payments. Multiply that by the number of homeowners not making payments to that mortgage company. The financial impact on the mortgage company will also be financially devastating. Mortgage companies, like your family, are bleeding cash just to survive. I am not discussing this so that you can feel sorry for your mortgage company; I am asking you to think about this so that you can be prepared for what is coming.
But, My Mortgage Company Will Work With Me, Won’t They?
There are currently in place under the Coronavirus Aid, Relief, and Economic Security (CARES) Act federal laws prohibiting foreclosure in many, but not all, cases. You can check with your lender now to see what programs they may have available for you. Even if they are currently prohibited by law from foreclosing, that situation will not last forever. I can pretty much guarantee you that, as soon as mortgage companies legally resume foreclosing on homes, they will do so as quickly as they can.
Fast forward to the point in time that mortgage companies resume foreclosing on peoples’ homes. You might receive a foreclosure notice and assume that you will contact them and work out a plan for you to catch up the payments. After all, you have been a good customer of theirs, right? Maybe they will in fact work with you, but decades of experience dealing with such issues, tells me that it is more likely that you won’t be able to afford to catch up as quickly as they want you to. You can sit back and wait to see how things play out or you can be proactive. Contact your mortgage company to work out a repayment plan as soon as you have income to do so. If you can’t afford to pay them what they demand that you pay, you can consider filing a chapter 13 case to save your home and avoid losing it to foreclosure.
How Can A Chapter 13 Help Me?
Generally speaking, if a person is facing foreclosure, a chapter 13 bankruptcy case should be filed before the foreclosure sale date. The bankruptcy laws will freeze the foreclosure and you will have an opportunity to propose a plan to catch up your mortgage payments, typically over a 36 to 60 month time period. The bankruptcy court has the power under federal law to approve a reasonable repayment plan which your mortgage company may be forced to accept, whether they like it or not.
Get Legal Advice From An Experienced Bankruptcy Attorney
Bankruptcy is a complex area of the law. This article is intended only to inform you that you may have options to deal with your situation. However, everyone’s situation is different and this information should not be considered as providing legal advice. It is not a substitute for the sound legal advice of an attorney who can analyze your particular financial situation and advise you accordingly. Gold, Lange and Majoros, PC is here if you need us.
Recall in part 1 and part 2 of this article that Joe is a former Florida resident who moved to Michigan and then filed chapter 7 bankruptcy. Under the bankruptcy code, Florida is considered to be his domicile because he lived in Florida for the 180-day period preceding the 730-day period preceding the filing of […]
Recall in Part 1 of our Chapter 7 Bankruptcy blog series that “Joe” is a former Florida resident who filed chapter 7 after he moved to Michigan. Under the bankruptcy code, Florida was considered to be his domicile because he lived in Florida for the 180-day period preceding the 730-day period preceding the filing of […]