The COVID-19 pandemic has completely altered the American landscape. Many states are operating under shelter-in-place orders, hospitals are doing what they can to manage those who have been affected the worst by the virus, and many Americans have been left unemployed.
As uncertain as these times are, families and individuals still need money to ensure they can pay their bills and put food on the table. In the event of a job loss, someone with significant debt could be looking into their relief options. Because of the virus, it can be difficult to know where to turn and how to best protect your financial future. With the help of a Baltimore bankruptcy lawyer from Belsky & Horowitz, LLC, you will have a comprehensive understanding of Maryland’s COVID-19 bankruptcy laws and procedures so you can make the best decision for your family.
To start understanding how the state is handling bankruptcy claims, let’s take a look at the CARES act and what the federal government has to say about bankruptcy and repayment.
The CARES Act and Bankruptcy
In response to the COVID-19 pandemic, the Coronavirus, Aid Relief and Economic Security Act (the CARES Act) was signed into law to provide a $2 trillion economic stimulus package to support U.S. businesses and individuals impacted by the coronavirus. The CARES Act includes revisions to certain provisions of the U.S. Bankruptcy Code in order to provide more effective bankruptcy relief to those that need it during this time. Key changes consumers should be aware of include the following:
- Chapter 13 debtors with existing repayment plans can seek plan modifications if they have suffered financial hardship due to COVID-19. Options include extending payments for up to seven years after the first plan payment was due, which reduces their monthly payment obligation.
- Coronavirus related payments received by families and individuals from the federal government through the CARES Act and other stimulus will not be included in the definition of income or considered disposable income when someone files bankruptcy.
Maryland Court Operations During COVID-19 Pandemic
The United States Bankruptcy Court for the District of Maryland is closely monitoring the COVID-19 pandemic and ensuring it follows all the recommended guidelines as provided by the Maryland Department of Health and the Centers for Disease Control and Prevention (CDC). As such, the Court has issued orders limiting operations, suspending various proceedings, and extending certain deadlines.
The Clerk’s office is open to the public through telephone access, as well as the drop boxes located in each courthouse’s lobby. In Baltimore, drop box hours are from 9 a.m. to midnight. In Greenbelt, drop box hours are from 9 a.m. to 6 p.m. All in-court proceeds in the Greenbelt Division are temporarily suspended until further notice. In the event an emergency bankruptcy matter arises in the Greenbelt Division, it shall be heard in Baltimore unless the presiding judge orders otherwise.
In regard to deadlines, most bankruptcy filings that expire between March 16, 2020 and June 5, 2020 have been extended by 84 days, assuming the presiding judge doesn’t set a different date. In regard to Chapter 13 plan modification motions, the Bankruptcy Court set an expedited deadline for motions to temporarily suspected Chapter 13 plan payments and wage orders.
With bankruptcy hearings, however, all hearings scheduled to occur from March 16, 2020 through June 5, 2020 have been continued unless the presiding judge ordered otherwise. Where possible, the Court prefers that all communications be made by email.
Foreclosure and Collections Actions During Coronavirus
In the event a homeowner is unable to pay their mortgage because of COVID-19 related circumstances or they are currently facing foreclosure, they should notify their lender as soon as possible to discuss their options.
Under the CARES Act, homeowners with reduced income may qualify for mortgage relief. Financial institutions can grant temporary mortgage suspension, also known as forbearance, on federally-owned or federal-backed mortgage loans. If your mortgage is not federally-owned or backed, many of Maryland’s banks, credit unions, mortgage lenders, and servicers are providing flexible options including payment deferrals, waiving late fees, and refraining from reporting certain negative information to credit bureaus.
For a homeowner that is facing foreclosure, Governor Hogan enacted emergency orders on March 18, 2020. For residential foreclosures and evictions that were already in-process, the emergency order stops them from moving forward in the court. Additionally, no new residential foreclosures can be initiated at this time. Expiration dates have not yet been set for those orders.
In regard to creditors and their ability to initiate bankruptcy proceedings or make collections, Maryland’s governor issued an executive order prohibiting garnishment of CARES Act recovery rebates. This means that regardless of debt and financial problems, the residents of Maryland have the right to the full benefit of their stimulus check to protect their lives and property.
Planning Bankruptcy Filing After Stay-at-Home Orders
According to an article from CNBC from April 2020, bankruptcy attorneys all across the country have been fielding calls at all hours of the day, including late nights and weekends. The panic is due, in part, to the fact that over 36 million Americans have filed unemployment claims as shelter-in-place orders have resulted in lay-offs and furloughs.
As the number of claims continues to climb, many Americans worry about their ability to pay rent and other bills, as well as buy essentials like groceries. It’s estimated that approximately 58% of Americans have already lost income as a result of the COVID-19 pandemic.
If you’re struggling with managing insurmountable debt—whether you’ve racked up credit card debt, medical bills, or are unable to pay your mortgage, it’s best to get in touch with an experienced bankruptcy attorney who can provide you with the legal guidance you need.
If you decide to proceed with the bankruptcy process after the stay-at-home order has been lifted, you’ll need to understand how continued CDC recommendations will impact your filing process. For example, it’s possible that you’ll have contact with creditors, your trustee, or the judge remotely by telephone or ZOOM—which is what’s been happening since April 13, 2020.
While the District Court is available to hear and resolve emergency matters, including first day filings, it’s possible that future claims could be scheduled further out than normal. Your lawyer will keep you up-to-date on your case and make sure the process goes as smoothly as possible.
Contact Belsky & Horowitz, LLC
If you’re struggling financially and are worried about foreclosure or bankruptcy in the midst of the COVID-19 pandemic, a Baltimore bankruptcy lawyer from Belsky & Horowitz, LLC can review your situation and help you determine what your options are. Depending on the continued impact of COVID-19 and what restrictions remain in place in the future, the bankruptcy filing process could take longer than normal.
Depending on your circumstances, you may be able to pay the minimum on all your bills until work picks up again or try negotiating a settlement of some kind with your lenders. If neither of those options works for you, we can discuss bankruptcy.
We understand how trying these times are for many people in Baltimore, throughout the rest of the state, and all over the country. We’re here to help you understand your legal options if you’re struggling financially. To learn about how to secure your financial future, contact us today