Our Philadelphia bankruptcy attorneys answer common questions about Pennsylvania bankruptcy, debt settlement, foreclosure, and other financial issues during the COVID-19 (Coronavirus) crisis:
Can I consult with you about my debts during the crisis? Yes. All of our bankruptcy, debt settlement, and other services are available. We offer free bankruptcy and debt consultations via phone or video, including Zoom©, Skype©, FaceTime©, etc.) See our telephone and video meeting page for more details.
Can I file for Bankruptcy during the COVID-19 crisis? Yes. All aspects of Chapter 7 bankruptcy and Chapter 13 bankruptcy cases from the initial consultations can be conducted via telephone, video, email, and our secure client portal. (We are still receiving postal mail for clients who prefer to mail documents to us.) We file all cases electronically, and the courts have required all bankruptcy hearings to be held via telephone or video for the present.
Are the bankruptcy courts and trustees' offices open during the emergency? Yes, for the time being, the bankruptcy court and trustees in the Eastern District of Pennsylvania are conducting all hearings, such as the meeting of creditors, via telephone and video. To date, the courts are still doing business but with safeguards to protect the public and court personnel. If you are a client of Harborstone Law, we will keep you informed of any changes to the court schedule and procedures.
Are you offering debt settlement/debt negotiation services while the crisis is still in effect? Yes, our debt settlement services are available during the crisis. We can obtain all the information we need from you via phone, video, email, and our secure client portal. Not surprisingly, most creditors and debt collectors are still operating, and we can reach most of them to discuss settlement. (However, some collectors appear to be understaffed.)
Can my bank or mortgage company foreclose on me in Pennsylvania during the COVIDCOVID-19 crisis? No, not at present. Consumer mortgage loan holders cannot foreclose or evict until the foreclosure moratorium ends. It is presently scheduled to expire on August 31, 2020, having recently been extended by the governor.
Can my landlord evict me during the crisis? No, a landlord cannot evict for nonpayment of rent. The governor's foreclosure and eviction moratorium includes renters and runs through August 31, 2020. The moratorium does not cover other breaches of a lease, such as damaging property.
Is my bank or mortgage company required to provide me with a forbearance? It depends on what type of mortgage loan you have. Under the CARES act, if you have an FHA, VA, USDA loan, or a loan backed by Fannie Mae, Freddie Mac, your mortgage loan provider must offer you a forbearance of up to 180 days with an option for an additional 180 days. Typically, banks are offering three-month forbearance that can be renewed. The specific payback options include adding the forbearance amount to the end of the loan (deferral), paying back the full amount in a lump sum, or a payment plan. About 75% of all mortgage loans fall into the government-backed category.
Can I obtain a forbearance if my mortgage is not government-backed? If your mortgage loan is not government-backed, there is no forbearance requirement. However, some such lenders are offering forbearances. Note that these lenders are not required to allow you to tack the forbearance amount to the end of the loan. Therefore, even if the lender offers a forbearance, be sure that you understand the repayment terms before accepting it.
Will a CARES act forbearance harm my credit? It should not. Under the CARES act, the status of your loan at the time of the forbearance is frozen. For example, if you were current, your loan will continue to be reported as current during the forbearance. If you were sixty days behind, the forbearance would show you as sixty days behind during the forbearance (unless the forbearance was retroactive and cleared the arrearage). That is not to say that some lenders will not consider a CARES forbearance in some way, but it should not hurt your credit rating.
How does the CARES Act affect Bankruptcy? The CARES Act temporarily modifies the Bankruptcy Code in two ways that will affect debtors:
1) COVID-19-related payments do not count towards the means test. Payments related to the COVID-19 crisis do not count when calculating "current monthly income" in Chapter 7 and Chapter 13 cases or "disposable income" in Chapter 13. Chapter 13 debtors may modify their plans if they can show "material hardship." As a result, debtors can avoid being disqualified for Chapter 7 or making a higher payment in Chapter 13 solely due to the CARES stimulus or similar payments.
2) Some Chapter 13 plans extended. In confirmed chapter 13 cases, debtors may modify their plans to extend their plan payments for up to seven years if they suffer from financial hardship "directly or indirectly" related to the COVID-19 crisis. It is still unclear how the courts will interpret these provisions, but it should help some debtors who have reduced income because of the crisis.
These changes expire on March 27, 2021.
Foreclosure and Eviction Moratorium Extended. Pennsylvania Governor Wolf has extended the moratorium on foreclosures and evictions until August 31, 2020. The move should alleviate the immediate concerns of struggling homeowners and renters. At the least, it gives them some additional time to look at long-term options. Massive evictions are expected in the Philadlephia area when the moratorium is lifted.
Supplemental Unemployment Scheduled to End. The extra $600 per week in Federal Pandemic Unemployment Compensation ran out on July 25 in Pennsylvania. So far, Congress has not been able to agree to an extension. The end of the program will be a severe financial blow many in Pennsylvania, where the unemployment rate is still in double digits.
Telephonic or Video 341 Meetings Extended. The United States Trustee for Region 3 has extended the use of telephone and video for the meetings of creditors (341 hearings) until October 10, 2020. Chapter 13 hearings continue to be held by phone and video. Chapter 13 meetings and hearings continue to be conducted via telephone as well.
Cares Rent Relief Program begins in Pennsylvania. The Pennsylvania Housing Finance Agency (PHFA) will provide $150 million in rental assistance to tenants who qualify throughs the PA CARES Rent Relief Program. Tenants must apply by November 30. Philadelphia residents can apply online, but renters from most other counties must file a paper application by mail or email.
Free Credit Reports. All three major credit bureaus (Experian, Equifax, and TransUnion) now offer free weekly free credit reports to all Americans. The free reports are available through AnnualCreditReport.com until April 2021. We encourage everyone to use this opportunity to review their credit reports. There are plenty of opportunities for creditors to make reporting mistakes during a crisis.
Waiver of "Wet Signature" Requirement. The U.S. Bankruptcy Court for the Eastern District of Pennsylvania has suspended the requirement under Local Bankruptcy Rule 5005-7(b) that attorneys secure the debtor's signature on the petition and schedules before filing the case electronically. Attorneys may obtain the client's signature electronically (1) through authenticated commercially available digital signature software, either directly or with the debtor's written permission (email permission is acceptable); or (2) through a copy of the signed documents sent to the attorney electronically (email, fax, etc.). The Bankruptcy Court has issued general and specific guidelines to deal with disruptions caused by the COVID-19.