News
Millions Of Americans Skipping Payments As Tidal Wave Of Defaults, Evictions Looms
reports 6/4/20 Credit & Collection e-newsletter Americans are skipping payments on mortgages, auto loans and other bills. Normally, that could mean massive foreclosures, evictions, cars repossessions and people’s credit getting destroyed. But much of that’s been put on pause. Help from Congress and leniency from lenders have kept impending financial disaster at bay for millions of people. But that may not last for long. The problem is, these efforts aim to create a financial bridge to the future for people who’ve lost their income in the pandemic — but the bridge is only half built. For one thing, the help…
California and additional States Sue US Governement over New Payday Lending Rule
California and additional States Sue US Governement over New Payday Lending Rule (adopted by US Government on 6/2/20) that Makes Payday Lenders NOT subject to “cap” on the (extremely high) interest rates the Payday Lenders can charge consumers on unsecured loans, so Long as the Payday Lender “partners” with a Bank: Trying to stop the cycle of unsophisticated borrowers getting trapped in a recurring cycle of debt, multiple states have imposed regulations on payday lenders in recent years – regulations that will no longer apply to some lenders under a new Trump administration rule. California, Illinois and New York sued…
Big Bankruptcies Sweep the U.S. in Fastest Pace Since May 2009
In the first few weeks of the pandemic, it was just a trickle: Companies like Alaskan airline Ravn Air pushed into bankruptcy as travel came to a halt and markets collapsed. But the financial distress wrought by the shutdowns only deepened, producing what is now a wave of insolvencies washing through America’s corporations. In May alone, some 27 companies reporting at least $50 million in liabilities sought court protection from creditors — the highest number since the Great Recession. They range from well-known U.S. mainstays such as J.C. Penney Co. and J. Crew Group Inc. to air carriers Latam Airlines…
US Senate Bill Would Ban Garnishment Of Relief Funds By Debt Collectors
A bipartisan group of senators have introduced legislation to prevent debt collectors from garnishing coronavirus relief payments from consumers. Sens. Sherrod Brown, D-Ohio, Ron Wyden, D-Ore., Chuck Grassley, R-Iowa, and Tim Scott, R-S.C., have sponsored legislation that would bar private debt collectors from garnishing the “recovery rebates” that were provided to consumers through the Coronavirus Aid, Relief, and Economic Security Act. “Congress came together to pass the CARES Act, which provided money to help working families pay for food, medicine, and other basic necessities — it’s not for debt collectors,” Brown, the top Demcorat on the Senate Banking Committee, said…
Potential Wave of U.S. Bankruptcies Draws Nearer as Corporate Distress Spreads
For many troubled companies, like luxury retailer Neiman Marcus Group Inc., which filed today, the lockdown to blunt the COVID-19 coronavirus super-charged the effects of pre-existing problems like debt overloads and the inability to please fickle consumers. For others, the debt they rack up while the pandemic rages may prove insurmountable once the health threat is over, Bloomberg News reported. “Everyone’s distressed watch list has become so big that it doesn’t even make sense to call it a watch list — it’s everyone,” said Derek Pitts, head of debt advisory and restructuring at PJ Solomon, which tracks the financial well-being…
Housing Market Faces Its Next Crisis as May Rent and Mortgages Come Due
While aggressive federal and state intervention and temporary corporate measures have prevented a surge in evictions and foreclosures, the housing and rental market has fallen into a severe crisis that threatens the ability of millions of Americans to stay in their homes even if the coronavirus pandemic eases in the coming months, the Washington Post reported. [as reported in 5/4/20 American Bankruptcy Institute e-newsletter]
Bankruptcy Code’s Small Business Reorganization Act Debt Limit is Increased to $7,500,000 for One Year, by the CARES Act that is part of US Legislation to Combat the Covid 19 Pandemic
In February 2020, the Small Business Reorganization Act of 2019 (“SBRA”), also known as Subchapter V of Chapter 11 of the Bankruptcy Code, went into effect. The SBRA includes a number of provisions that make Chapter 11 reorganization quicker, cheaper and more effective for businesses with total debts under $2,725,625. The recently enacted CARES Act, designed to aid businesses suffering the effects of the coronavirus, increases the debt limit to $7,500,000 for one year, which will enable a far greater number of companies to take advantage of the SBRA
Increase In Applications for Unemployment Benefits
Wall Street Journal, on 3/26/20, reports that a record 3.28 million workers applied for unemployment benefits last week as the new coronavirus hit the economy, ending a decade long job expansion.
Five Big Banks Suspend Mortgage Payments
Five of the nation’s largest banks have agreed to temporarily suspend residential mortgage payments for people affected by the coronavirus, California Gov. Gavin Newsom said Wednesday. The announcement came as Newsom provided yet another grim statistic about the economic devastation from the virus: 1 million Californians have filed for unemployment benefits since March 13 as businesses shut down or dramatically scaled back because of a statewide “stay-at-home” order to prevent the spread of the virus. Meanwhile, Newsom said California is rapidly expanding its supply of equipment for health care workers and hospital beds in anticipation of the expected surge in…
67 Million Americans May Have Trouble Paying Credit Card Bills
Even before the spread of corona virus (aka COVID-19) brought the U.S. economy to a near standstill, Americans were taking on increasing amounts of debt. Now, around 67 million Americans said they will have trouble paying their credit card bills due to the outbreak and its aftermath, according to a new Coronavirus Money Survey by personal finance site WalletHub. “Their struggles could easily ripple through the economy if left unaddressed, especially considering the more than $1 trillion in credit card debt currently owed by U.S. consumers,” said Odysseas Papadimitriou, CEO of WalletHub. According to data from the Federal Reserve, the…