Covid-19 Programs & Debt Relief
WHAT PROGRAMS ARE AVAILABLE?: Currently, the main programs available to consumers include the unemployment Covid relief supplement (of approximately $600 per week), and the stimulus payments by the Treasury. Businesses may be eligible for EIDL or PPP loans depending on their date of incorporation, annual revenues, and other factors.
WHAT ABOUT MY HOME?: Many individuals can seek deferment or forbearance during the Covid pandemic. While this may be a good option in the short-term for some, it does not always have positive results.
Interest and fees may accrue on top of principal under some home lenders' programs, even if they provide you a temporary pause on monthly payments.
WHAT ABOUT STUDENT LOANS?: Student loans issued by the Federal government will accrue no interest, and not be due, until September 2019 for many debtors. After this time period, either Congress will need to extend the date, OR they will begin accruing interest and become due again.
Debt reorganization under Chapter 13 may allow a debtor to reduce payments on student loans temporarily, even after the Covid legislation has expired. For example, under a Chapter 13 plan a Debtor may sometimes propose a significantly lower payment on their original unsecured debts. Once confirmed, the plan often allows a Debtor to lower their monthly payments.
WHAT ABOUT COVID BANKRUPTCY?: Under the current legislation, many Debtors that make higher income will still qualify for debt relief. A Debtor whose Covid-19 relief payments exceed the median income still qualifies for bankruptcy or debt relief if their wage income is lower than median.
A Debtor can qualify more easily for better terms if they fall under the Covid relief legislation that applies to debt reorganization. For example, Covid legislation allows Debtors a less stringent standard in calculating their disposable income in the means testing process.