Early demands to freeze the collection of past due debt during the Covid 19 shutdown had debt collectors across the nation scrambling their lobbyists to push back, expressing concerns that the suspension of debt collection activities would “pose an undue burden to the industry’s ethnically diverse workforce” and leave debtors “in the dark on how to handle their debt obligations”.
Many find the industry’s overt cries to protect their diverse workforce ironic considering many minorities suffer from predatory debt collection practices – a growing number who find themselves among the 71 million Americans that have debt in collections. The industry’s concern over how debtors will “handle their debt without them” also rings false to consumers inundated with robocalls and threatened with legal action when they fall behind on bills.
What is clear is that many Americans need relief, especially in the wake of the pandemic. Families across the nation are struggling to pay mortgages and rent, utility bills and other basic necessities. Most Americans are sitting on loads of credit card debt used to make ends meet. Targeted, temporary relief from debt collection activities, including legal proceedings garnishments, and repossessions in response to this emergency is crucial if they are going to have a chance to bounce back – the collective sentiment is that debt collectors need to back off.
Fortunately, reprieves from state owned medical debt and student debt in New York, Chicago’s temporary end to collection of city debt such as parking fines, and the push to prevent debt collector’s ability to disconnect utilities or garnish wages have all provided some relief to consumers during the pandemic as have federal stimulus packages to individuals and businesses. However, is it enough? .
For many Americans, bankruptcy protection offers a solution to a difficult financial situation made worse by the pandemic. For consumers with high unsecured debt such as credit cards and medical bills with few assets, chapter 7 provides a clean slate to individuals and families to start anew. A chapter 13 repayment plan is a strategy for people who are regularly employed and have a few assets, but nonetheless are struggling with debt and need protection from creditors while they make payments to satisfy their debt. For small business owners, a Chapter 11 business bankruptcy may offer the chance to turn a difficult financial situation around so they can resume business when the economy comes back.
If you are considering various strategies to tackle a difficult financial situation, remember that bankruptcy protection is your right. Bankruptcy is not the right fit for everyone, but it is a good strategy for many who are trying to get back on track. We are working during the Covid-19 shutdown. If you would like more information regarding chapter 7, chapter 13 or chapter 11 bankruptcy protection, contact Charles E. Covey to schedule an appointment at 309-674-8125.