dannlaw.com

Foreclosure Defense | Ohio | Chicago | New Jersey | Oregon | New York

Cleveland Office
216-373-0539
Cincinnati Office
513-951-7124
Columbus Office
877-475-8100
NY/NJ Office
201-355-3440

DannLaw acquires Zingarelli Law Office in move that will strengthen firm’s business bankruptcy practice

Foreclosure

By

Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyFounder Marc Dann and Managing Partners Brian Flick and Javier Merino are pleased to announce that DannLaw has acquired the Zingarelli Law Office, one of the Cincinnati area’s most highly respected consumer and small business bankruptcy law firms.

Atty. Nick Zignarelli, who will work with DannLaw on an “of counsel” basis, has been widely recognized for his work in bankruptcy and consumer law. He is rated 10 out of a possible 10 by Avvo, has been named a top rated bankruptcy attorney by Super Lawyers, is highly recommended by Martindale, and was awarded the Medal of Excellence by the American Institute of Bankruptcy Attorneys. “We are gratified and proud that Atty. Zignarelli agreed to affiliate with DannLaw and excited about the prospect of working with and learning from him,” Atty. Dann said.

“Nick’s experience and knowledge will be especially valuable at a time when individuals who lost their jobs and small business owners forced to close up shop by the coronavirus pandemic are staring financial devastation in the face,” Dann said. “As I’ve noted in a number of our COVID-19 updates, bankruptcy may be their best, and in some cases, their only option. Nick’s small business bankruptcy expertise will significantly enhance DannLaw’s ability to help clients utilize the law to preserve their assets and secure their financial future.”

Atty. Flick, Managing Partner of DannLaw’s Cincinnati office and Atty. Zignarelli will work together to ensure a smooth transition as the acquisition progresses. “I look forward to working with Nick as we strive to provide the best possible legal representation to new and existing clients in southwest Ohio and northern Kentucky,” he said.

By

Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyI was mildly enthusiastic about the CARES Act immediately after it was passed because it appeared to be substantially different from the stimulus plan crafted by the federal government during the Great Recession of 2008.

That package funneled trillions of dollars to the big banks and Wall Street speculators whose unfettered greed nearly destroyed the world’s financial system but did relatively little to help working and middle-class families devastated by the collapse of the housing market. By the time the economy began to turn around 10,000,000 of them had lost their homes.

By contrast, the CARES Act appears to direct $937 billion in aid to where it’s needed most: into the pockets of the more than 20,000,000 million Americans who are now unemployed and the bank accounts of small business owners who are literally hours away from losing everything they have built.

Sure, Congress doled out hundreds of billions of dollars to corporate America, including the airlines who have been ripping off travelers for decades, but the stimulus checks, enhanced unemployment benefits, and small business loan programs funded by the Act will help millions of people weather the Covid-19 storm—at least for the next couple months.

While it appears that Congress got a few things right, there are holes in the legislation that could negatively impact consumers, homeowners and small business owners. In this update I’ll identify the gaps and provide advice on who to deal with or avoid them.

Problems with the Paycheck Protection Program 

As I mentioned earlier, hundreds of thousands of small businesses across the nation are about to go under. The Paycheck Protection Program (PPP) is designed to help keep them afloat by providing forgivable loans owners can use to pay expenses including employee wages, rent, and utilities.

In concept the program is great. In practice, not so much.

That’s because the nationally chartered banks and SBA approved lenders charged with administering the program are permitted to pick and choose which applications to accept and in what order. As a result, they’ve been playing favorites. Business owners who have an existing relationship with a PPP lender go to the front of the line. Those who don’t, including minorities, are shoved to the back—if they’re able to apply at all. I’m sure you won’t be shocked to learn that Wells Fargo and other large financial institutions are telling smaller customers to hit the road and “try other banks.”  Publically owned Ruth’s Chris Steakhouse just announced that they alone sucked up $20 Million of the funds appropriated.

This type of discrimination is especially troubling in light of the fact that  Congress did not appropriate enough money to meet the needs of all the small businesses that are in trouble. When the money runs out, thousands of hard-working entrepreneurs and their employees will be doomed simply because they couldn’t access the help they were promised and desperately need.

We launched an investigation into this situation after being contacted by frustrated and infuriated small business owners. If you think something is wrong with the way a lender is handling or, more to the point, not handling your PPP application, please give us a call or email me at [email protected]

On the positive side, a number of clients have told us that smaller community banks are eager to process PPP paperwork. We’re not surprised. Over the years we’ve learned that community banks are extremely responsive to the needs of small borrowers. If you’ve been unable to make headway with a large lender, I encourage you to contact one of the community banks listed here.

Stimulus Checks can be hijacked by Judgment Creditors and banks

Stimulus checks funded by the CARES Act are already being deposited in the bank accounts of millions of Americans. That’s the good news.

Here’s the bad news: The Act doesn’t prohibit private debt collectors from garnishing stimulus money. That means if you’re behind on debt payments and have an outstanding court judgment, a private debt collector can grab your stimulus check. Attorney Javier Merino, head of DannLaw’s New Jersey office, along with consumer lawyers Josh Denbeaux and Ira Metrick just published an op-ed in the New Jersey Law Journal dealing with this issue.

If you fall in this category you should keep a close eye on your bank account and withdraw the money as soon as it is deposited. To stay one step ahead of judgment creditors you can track your stimulus payment here.

Here’s more bad news: if you owe money to the bank where your stimulus payment is being direct-deposited the bank can grab it. For example, if you have a bank account that’s been overdrawn, and your stimulus payment is deposited into that account, the CARES Act does not prevent the bank from taking part or all of the stimulus payment to pay back the debt. So far J.P. Morgan Chase and Wells Fargo have said they will not seize stimulus funds. Bank of America, Citibank, and U.S. Bank have yet to clarify their positions.

Waiver of Federal Student Loan interest is in doubt 

Federal Student Loans servicers have not been completely transparent about how they are going to implement the six-month zero interest, zero-fee forbearance included in the Act. In addition, some observers speculate that Navient, Greatlakes, and Nelnet don’t have the technology needed to properly track accounts. If you are taking advantage of the forbearance program please pay close attention to your loan statements and contact DannLaw or other attorneys if you notice a discrepancy in your account.

The CARES Act does not provide relief for federal loans originated before 2005 and private student loans 

The CARES Act does not provide forbearance for federal student loans originated before 2005 that were not consolidated or private student loans. If your loan falls into these categories you must continue to make your payments. If you are unable to do so, contact your servicer in writing and request a modification, forbearance or another type of accommodation.

Monitor your credit if you are taking advantage of the mortgage forbearance provisions of the CARES Act.

As we’ve noted in previous updates, the CARES Act provides for up to 12 months of payment suspension/forbearance for borrowers with federally-backed loans owned by Fannie Mae, Freddie Mac or insured by the FHA, VA and the Department of Agriculture. To determine if you have a qualifying loan send a request for information (RFI) to your mortgage servicer. We’ve drafted a simple RFI you can use. To obtain a copy email us at [email protected].

Please remember forbearance isn’t forgiveness.  That means you may be subject to higher mortgage payments, escrow payments, and other fees when you begin making your payments after the forbearance period. If you do take advantage of the Act’s forbearance program you should look closely at your monthly statement to make sure it is correct. You should also subscribe to a credit monitoring service and check regularly to make sure your servicer is not entering negative information on your credit report. If you notice discrepancies contact us at [email protected] so we can help protect you and determine if you have legal claims that may entitle you to financial compensation.

Bankruptcy may be the solution to your financial problems 

My parents always encouraged me to hope for the best but prepare for the worst. Today, their advice is more valuable than ever before because the COVID-19 emergency is causing unprecedented damage to our economy and levels of unemployment not seen since the Great Depression. Study after study has shown that a majority of Americans would have a difficult time meeting their obligations for more than a month or two if they lost their source of income. The ongoing crisis has validated those studies.

The $1200 stimulus checks and small business loans may ease the pain in the short term, but when that money is gone many business owners and individuals will be forced to consider filing bankruptcy in the months ahead. And while many people are loathe to do so, bankruptcy protections may provide the best option for dealing with the devastation caused by the crisis—a crisis none of us created or could have anticipated.

The fact that the courts and collection activity are essentially shut down gives business owners and individuals a unique opportunity to closely examine their financial situation and begin planning for the future—including a future that includes bankruptcy. Doing so will put you in a good position to move forward once the crisis ends if you don’t have to file and will help ensure that bankruptcy provides the maximum protection for your family and your business if filing proves to be the best alternative.

If you would like to schedule a phone or video conference with one of our experienced bankruptcy attorneys to discuss your financial future and the options that are available to you, please email [email protected]  We are here to listen, to advise, and to help.

By

Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyNow that we’ve had additional time to review the CARES Act, we would like to share some clarifications and observations along with advice about how to deal with bills and other financial obligations that may be coming due on April 1.

Here are some things to consider about paying your bills:

1. Pay your bills if you can. You should take advantage of options that allow you to delay making payments if you need to, not just because they are available.

2. If you don’t have enough money to make your mortgage payment and pay your other bills, please consider the following factors before deciding how to allocate the funds you have:

3. First, consider the amount you owe on your home relative to its value. This is known as the loan to value ratio. If your home is worth more than your mortgage balance it is an asset that you should protect. If it is worth less than you owe it is a liability so your mortgage payment should be viewed as a housing cost and compared to alternatives like paying rent. You should also evaluate other factors including the state of the housing market in your neighborhood, the company that owns your loan, and whether you intend to sell your house sometime in the next few years.

As we noted in earlier updates, borrowers whose loans are “federally backed” can apply for up to 12 months of forbearance. But remember, forbearance is not forgiveness. At the end of the forbearance period you will owe the payments you did not make and you will most likely need to modify your loan. At this time, there is no way to determine what the terms of such modifications will be. In addition, if you pay taxes and insurance via your mortgage and the servicer has paid those costs on your behalf, your escrow payment may well rise substantially when the forbearance period ends. In either case, you could be looking at steep increases in costs when you begin making payments again.

4. If you are unable to pay your mortgage you are entitled to suspension/forbearance under these circumstances:

  • Your mortgage is “Federally Backed” and covered under the CARES Act which provides a 60-day suspension and 12 months of forebearance;
  • You live in New Jersey, California, New York. These states have issued blanket orders suspending mortgage payments.

5. If the investor and/or loan servicer that holds your mortgage is not legally obligated to offer suspension or forbearance you should contact them to determine if they are offering programs that will help you manage your payments. Consider taking advantage of them if they make sense for you.

6. Although the CARES Act prohibits negative credit reporting in the short term for borrowers who were not behind on their mortgage or student loans when the Covid-19 pandemic began, creditors are not prohibited from reporting negative information during and after the crisis. If you rely on credit you should take steps to prevent your hard-earned credit score from dropping.

7. Remember: NOTHING prohibits many creditors from pursuing debt collection during this crisis. Do not ignore legal notices you receive. If you do, a creditor could obtain a judgement that will enable them to garnish your wages and attach your bank accounts. Keep control of you finances by communicating with your creditors.

8. If you are married or cohabitate, it is important for you to talk to your spouse or partner about finances. Be open, honest and transparent about your debts and thoroughly discuss the options and choices available to you. Don’t add to the stress associated with the Covid-19 emergency by concealing financial problems from your loved ones until it is too late to deal with them. This is especially true if one person is primarily responsible for  paying the bills. In our experience, being less than forthcoming about your financial situation can be a relationship killer. Don’t let it happen to you.

9. If you are not going to pay a bill, please inform your creditor or mortgage servicer in writing. You should also ask them if they are offering programs or plans that will help you manage your debt.

Communicating with your creditors in writing is important for three reasons:

Reason 1: Employees at most companies are now working at home which means it could take hours to a, reach them and b, discuss the situation which means you may miss a crucial scene on Tiger King.

Reason 2: The only records of a phone call will be the notes taken by the creditor, which you will not be surprised to learn, will not be written in your favor.

Reason 3: We can tell you hundreds of stories about creditors who broke promises because they know no record of the promise being made exists.

So, please, please, please, make sure there is a written record of what you promise the creditor and what they promise you. If you are unable to communicate in writing, record the phone calls if it is legal to do so in your state. Ohio and New Jersey are both one-party consent states which means you can tape away.

If you want help thinking through your choices, our lawyers are available for free initial video or phone consultations call 877-475-8100 or [email protected]

Clarification on Student Loan Issues

In the last update we incorrectly reported that all Federal Student Loans were covered by the payment holiday. Unfortunately, we were wrong. If you have a Perkins Loan or an FFEL Loan it is not subject to the relief provisions of the CARES Act. In a nutshell, if you have a Federal Student Loan that originated prior to 2005 and you did not consolidate it later, your loan is not protected by the CARES Act at all.

We are particularly concerned about the collection of Perkins Loans. In Ohio these loans are collected by the Ohio Attorney General and have become controversial because outside counsel and debt collectors have used aggressive collection tactics and added exorbitant fees to loan balances. DannLaw attorneys Emily White and Brian Flick recently wrote to Ohio Attorney General David Yost and asked him to protect Perkins Loans borrowers during the crisis:

Because our firm represents people who accrued significant debt while attending Ohio’s state colleges and universities, we are particularly concerned about the impact the ongoing emergency will have on student loan borrowers. Many are saddled with tens of thousands of dollars in debt that will take decades to pay off.  Low income students who received Pell Grants and Perkins Loans are in a more dire position if they are forced to leave mid-semester due to financial, medical, or family difficulties: they must repay their loans and grants immediately.

To make matters worse, the tactics used by debt collectors and outside counsel hired by the Attorney General’s Office to pursue borrowers have become increasingly aggressive in recent years. Those tactics combined with the charges and fees added to balances, including the 30% surcharge outside firms have been authorized to charge since 2017, make dealing with student loan debt difficult during the best of times—and these are far from the best of times.

 In the weeks and months ahead it will become increasingly difficult for Ohioans to pay meet their financial obligations. Governor DeWine, the federal government, and many companies are taking steps to help cushion the blow. I urge you to join them by suspending collection actions and waiving interest and fees for the foreseeable future. I also ask that you consider supporting the creation of a hardship waiver process that will enable Ohioans to deal with the long-term effects of the crisis. At this time in our history, state government should not be the creditor Ohioans fear most.

If you have a chance please join us in urging Attorney General Yost to stand down on collection of Perkins loans and Pell Grants during this crisis by visiting this website: [email protected].

Clarification on Mortgage issue

 We incorrectly reported that credit reporting would continue on Federally Backed mortgage loans that are subject to suspension or forbearance under the CARES act. That is not correct. If you are current on the loan prior to taking advantage of the suspension or forbearance provision of the Act negative credit reporting is prohibited.

 Stimulus Checks

 One of the most significant features of the CARES Act are the payments of $1200 or more the vast majority of American Families will receive. But the Act does not prevent existing judgment creditors from attaching bank accounts into which the payments will be deposited. Pay close attention to which account the IRS has on record and direct it to an account that is not subject to attachment if you can do so. In addition, as has been widely reported, payments to people who have unpaid child support will be directed to their children.

Scam Alert

Anytime the government engages in significant action like the CARE Act charlatans and scam artists begin cooking up ways to cheat those who are eligible for help as well as those who are not. This happened repeatedly when the Federal HAMP program was created. Here are some bad actors you should avoid:

  1. Anyone who promises to help you access your stimulus money. There is no application for the stimulus money. Make sure the IRS has your accurate bank account and contact information and the checks will be sent directly to you.
  2. Anyone who promises to help you apply for mortgage or student loan assistance. If you are unsure or need help in deciding what to do about suspension or forbearance of mortgage or other debt only seek advice or help from an attorney licensed to practice law in your state.
  3. Anyone other than your lawyer or CPA who offers to help you access Small Business Assistance under the CARES Act.

If you sent money to someone engaged in a scam in order to profit from this crisis contact an attorney or law enforcement agency right away. Ohio and New Jersey have strong consumer protection laws that will enable you to seek and secure damages from cheaters and scam artists.

This information is not, nor is it intended to be, legal advice. You should consult an attorney for advice. We can be reached at 877-475-8100 or via email at [email protected] or [email protected].

By

Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyI’ve been involved in politics and government for over 40 years and I can say  definitively that I have not seen legislation that offers as much direct and immediate relief to distressed consumers, borrowers, small business owners and tenants as the Covid-19 stimulus package, known as the CARES Act that Congress passed on Friday, March 27.  You can read an analysis of the bill here. You can read the legislation in its entirety here.

While I’m generally pleased with the CARES Act, I do have two concerns:

First, I believe government, mortgage loan servicers and banks may make significant mistakes and cause undue delays as they implement the legislation, and, second, I worry that many mortgage, consumer, and student loan borrowers may not receive the assistance they will need to weather the Covid-19 emergency.

Here’s the bad news…

The Acts’ protections only apply to federally-backed mortgage loans.

If  you are among the more than 50% of homeowners whose mortgage is “federally related” i.e. owned by Fannie Mae, Freddie Mac or insured by the FHA, VA and the Department of Agriculture help, which I’ll describe later, is on the way. But many borrowers, including those who have recently been in default in recent years, are not eligible for relief because their loans are not owned by the listed entities. That means it’s very important to find out who owns your loan. We can help you find out or you can send a “Request for Information to your servicer. Many loans that were formerly owned by Fannie Mae and Freddie Mac or insured by the FHA have been resold. In many cases hedge funds that are not obligated to offer the forbearance of payments included in the bill now hold own the loans.

The Act does not address Private Student Loans.

If your loan is not owned by the U.S. Department of Education then you are not eligible for the 6-month, consequence-free payment holiday included in the Act. While some courts in some counties have placed stays on some collection activity, lawsuits and other collection actions involving private student loans may proceed.

The Act’s eviction protections for renters apply to a very small category of landlords

Landlords who have loans from Fannie Mae or Freddie Mac and who seek mortgage assistance are prohibited from evicting tenants. Unfortunately, the vast majority of landlords do not fall into this category.

It is important to note that the members of Congress did not carve out these exceptions because they don’t care about the people they impact. The exceptions exist because the federal government generally lacks the power to control the private creditors involved.   

Now for the good news—and there’s lots of it…

Mortgages:

Mortgage Servicers for Federally Backed Mortgages must provide a 60-day suspension of payment obligations to borrowers who claim they are unable to apy because they have been impacted they Covid-19 crisis.

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. It is important to note, however, that the Act does not prohibit negative credit reporting during the forbearance period.

Servicers of Federally Backed Mortgages are prohibited from moving forward to foreclose or evicting anyone from now until May 17, 2020.

Student Loans:

All Payments on Federal student loans will be suspended for six months. More significantly, no interest, penalties, or fees will accrue during this time period.  The non-payments will be treated as payments for the purpose of forgiveness, loan rehabilitation or public service loan forgiveness programs.  In addition, the Act contains a very consumer-friendly provision that requires lenders to report the borrower as paying currently to credit reporting agencies. Remember these provision DO NOT apply to Private Student Loans.

Unemployment Compensation:

The Act adds $600 per week in federal unemployment benefits to the amount paid by each state. For many workers this means unemployment checks will nearly equal their normal wage. You must still apply through your state’s unemployment system.

Small Business Owners:

Small business owners can apply to banks or other SBS-approved lenders for loans to cover eight to ten weeks of expenses including payroll, rent, health insurance, sick pay and other day to day costs. The loan is forgivable if the business keeps its employees on the payroll during the period. Banks will originate and service the loans and the Government will subsidize them through the SBA. While $355 billion has been appropriated, based on my discussions with clients, the money may run out so we suggest that small business owners apply right away.

Bankruptcy Changes:

The following changes to the Bankruptcy Code will be in effect for the next 12 months:

The stimulus checks Americans receive will not be considered income for purposes of filing a Bankruptcy.

For those already in a confirmed Chapter 13 Plan, the Bankruptcy Code has been amended to allow for Debtor(s) 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 84 months/seven years.

The definition of Debtor for purposes of filing Subchapter V of Chapter 11 also known as the Small Business Reorganization Act has been expanded to include all debtors, not just those defined as a small business:

The following change to the Bankruptcy Code is permanent:

The debt limit for cases eligible to file under the new Small Business Reorganization Act under Chapter 11 (a.k.a. SBRA or Subchapter V) has been increased to $7,500.000.00

See Previous updates on this crisis and its impact on consumers here

For more information contact [email protected] or call 877-475-8100

Marc Dann

[email protected]

By

Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyAn important message from Marc Dann:

We are open and reachable during normal business hours and beyond and you can reach me on my cell phone at 330-651-3131. Rest assured that I will either be at home or at the office because like you, I’m really not allowed to go anywhere else.  We will be happy to answer any questions you have about your existing case(s) as well as the many coronavirus-related legal issues our friends and clients are facing on an almost hourly basis. If you need to speak to one of our attorneys please use our toll-free line 877-475-8100. We answer 24 hours a day.

Here are several things to remember:

  1.  We can arrange for phone and video conferences for new and existing clients.
  2. You can make retainer payments online. If you are a client of our Ohio office click here: DannLaw Payment Link  Clients of our New Jersey office click here: DannLaw NJ Payment Link
  3. If you are experiencing additional financial hardship related to the COVID-19 emergency and need to make financial arrangements please contact us right away.
  4. We are constantly monitoring legal developments related to the emergency that are important to consumers, borrowers, homeowners, and small businesses. If you have questions or need information please contact us and we will try to find answers for you.
  5. If you are unable to make your mortgage payment or pay other consumer debts please contact us so we can discuss options and alternative strategies. We can’t help you unless and until you contact us.
  6. If you are in Chapter 13 Bankruptcy and are unable to make a Chapter 13 Payment, please contact us ASAP so we can discuss options and alternative strategies.  Working preemptively with the Chapter 13 Trustee and the Court regarding payments will help avoid unnecessary Motions to Dismiss.
  7. For our clients in Chapter 13 Bankruptcy and all other clients: the COVID-19 emergency has not changed deadlines for filing tax returns.

Here are some other important developments:

  1. Ohioans can now apply for and receive unemployment benefits immediately if they are laid off due to the emergency. Click here for information about how to apply online for unemployment benefits.
  2. SBA Loans should be available to Small Business Owners facing financial challenges from the current situation. Click here to learn more.
  3. Judge Brendan Sheehan in Cuyahoga County has issued a 60 day stay on foreclosure sales and on the prosecution of foreclosure cases. See the details here. Please note that all deadlines that apply to those in foreclosure or who are working to resolve disputes with their mortgage companies remain in effect. Rules and regulations have not been adjusted. Lawsuits that have been filed and served must be answered. Any matter that needs to be objected to or appealed would not be covered by this order.  This is good news but please keep in close touch with us about your existing case or any issues you might learn about relating to your mortgage. If you have questions, please email Attorney Whitney Kaster at [email protected]. 
  4. While Cuyahoga County has stayed these cases, many other courts in Ohio have not. One of our Partners, Brian Flick in his role as Ohio Chairperson of the National Association of Consumer Attorneys wrote to Chief Justice Maureen O’Connor on March 16, 2020 asking that she issue guidance to local courts to stay all non-essential Debt Collection and Eviction Cases and to postpone all pending Sheriff’s sales until the State of Emergency Declaration is terminated. If you are in a County that has not adopted emergency procedures staying civil cases, please email [email protected]  He and NACA are committed to ensuring access and due process to all consumers during the pandemic.
  5. Both the Hamilton County Municipal Court and the Court of Common Pleas have issued a 30-day stay of all civil and criminal trials in the Courts (with limited exceptions).  See the details here. This is good news but please keep in close touch with us about an existing case or any issues you may learn of related to your case.  If you have questions, please email Brian Flick at [email protected].
  6. The New Jersey Legislature has enacted statewide mortgage relief including forbearance of payments and a stay on foreclosure proceedings. Here is what we know about it. The same disclaimer applies here:  Please note that all deadlines that apply to those in foreclosure or who are working to resolve disputes with their mortgage companies remain in effect. Rules and regulations have not been adjusted. Lawsuits that have been filed and served must be answered. Any matter that needs to be objected to or appealed is not covered by this order. Javier Merino stands ready to answer all of your New Jersey Consumer Law Questions [email protected]
  7. My earlier post on how to protect yourself if you experience financial hardship is here.
  8. The Ohio State Bar has advice on what your employer may and may not do.
  9. The Veterans Administration has directed servicers to not report to credit agencies or assess late fees to borrowers who are late as a result of the virus.For more information on that contact [email protected]

 

As always we stand ready to help our friends, neighbors and clients as this crisis unfolds. Never hesitate to call 877-475-8100 or email us at [email protected] or [email protected].

By

Marc Dann - Marc Dann Consumer Fraud & Foreclosure Defense AttorneyWhen I woke up this morning to another stream of stories about the Coronavirus, I wasn’t worried about the impact the growing crisis was having on big banks or the stock market—as has been proved time and again, they’ll recover or be bailed out, or both.

Instead, I was concerned about the people reporters obsessed with Wall Street losses ignore:  people like the guy who was counting on catching up on his Christmas credit card charges by selling hot dogs at the NCAA tournament at Rocket Mortgage Fieldhouse, the Cleveland cop banking on overtime earned by working the St.Patricks Day parade to pay his daughter’s college tuition, and the self-employed vendors who eke out a living selling jewelry and crafts at kiosks during the Cleveland International Film Festival. I’m worried about them because there’s no bailout in the offing for the millions of retail clerks, waitresses, Uber drivers, and other hourly workers who lose billions of dollars in wages as the rest of us follow orders to engage in “social distancing.”

Along with living paycheck to paycheck, many of the workers I’ve described have no or inadequate health insurance. They don’t have paid sick leave. And many are saddled with crushing student loan debt, mortgage payments that consume nearly half their gross income, or are renters who will be evicted quickly if they miss their monthly rent payments.

At DannLaw, our experience helping consumers and homeowners recover from the Great Recession gives us a unique perspective and valuable insight on how people can avoid financial disaster as the coronavirus crisis spreads and what government should do to support working families.

Here is our best advice for individuals and families:

  1. Don’t put your head in the sand. As soon as you know you may not be able to pay one, some or all your bills contact your creditors, explain your situation, and ask for forbearance or other adjustments to your account. It is important for you to communicate with mortgage servicers, credit card companies, landlords and other creditors via letter or email. Make sure to keep copies of all correspondence because it will serve as a  permanent record of what you promise them and what they promise you.
  2. Closely review automatic payments being charged to your credit cards or bank accounts. Avoid costly bank fees and overdraft overcharges by canceling payments you aren’t sure you can make. One overdraft can cause a cascade of bounced checks resulting in hundreds of dollars in NSF charges and late fees that could have been avoided
  3. Don’t try to borrow your way out of the situation. You’re going to see lots of solicitations from “debt consolidation” companies and payday lenders. While these loans may provide short-term relief, their steep interest rates will cause long-term problems that will jeopardize your financial future. Working with existing creditors is a much more sensible and safe approach.
  4. Do not ignore anything delivered to you in person or by regular or certified mail from a court. If you do not respond to a summons or hearing notice you will soon be subject to wage garnishments, bank account attachments or judgment liens. Call a lawyer if you are sued even if you think you can’t afford one because there are often legal defenses to collection actions, evictions and foreclosures. Our firm and many others will provide free phone or in-person consultations. If an attorney finds that fee-shifting or counterclaims exist in your situation they may represent you on a contingency fee basis.
  5. Keep an eye on your credit report. Credit Karma and other free services will notify you immediately if a creditor reports you as delinquent or puts a claim in collection. You may be able to mitigate damage to your credit score by communicating with the creditor or placing an explanation of your situation in your credit report. Contact a lawyer right away if you find that someone is entering inaccurate information in your report. You may be entitled to protection and compensation under Federal Law.
  6. Avoid withdrawing funds from your retirement accounts. Withdrawals will cause tax consequences that you may regret the following year and they are often the only assets people have that are exempt from collection efforts.

Now let’s turn to what government can do to support and protect hourly and self-employed workers:

  1. Suspend the obligation to pay government student loans. Offer immediate forbearance with no accruing interest. This will provide immediate relief to borrowers who are not working or whose income has been reduced. In addition, it will boost the economy by giving people who are still working additional disposable income.  The Secretary of Education and the President could issue forbearance with the stroke of a pen.
  2. Place a moratorium on negative credit reporting for the duration of the pandemic and for a six-month period after the crisis ends. This will enable borrowers who were not in default before the crisis to maintain their positive credit rating.
  3. Suspend tuition payments to state community colleges and universities. Dorm closings are costing Ohio families millions of dollars. Suspending tuitions payments during the crisis will give many parents and self-supporting students the opportunity to stabilize their finances during the crisis. Once the emergency ends payments could be spread out over the years a student remains enrolled or be extended until after graduation.
  4. Allow Fannie Mae Freddie Mac, FHA and VA to suspend their rules governing how often and how many times a mortgage modification may be granted. This move, coupled with forbearance upon proof of reduction or elimination of unemployment will help working people hold onto their homes during this difficult time.
  5. Allow student loans and home mortgages to be modified in bankruptcy. This reform is long overdue and will provide both creditors and debtors with an equitable way to determine how much a borrower can pay while maintaining stable housing and jobs.
  6. Expand unemployment insurance to include sick days related to the outbreak and waive the one week waiting period for the duration of the crisis.

We hope our insight and advice is helpful to consumers and will spur positive action among policymakers at the state and federal level.

Be well and remember, wash your hands—often.