March 30, 2020 Care Act Seminar Update
Good evening all. I want to share with you some of the important information I learned this afternoon while participating in an on line seminar sponsored by NACBA, the National Association of Consumer Bankruptcy Attorneys, the premiere organization made of the very best attorneys in our profession, and where I have been a member for over 25 years. Today’s seminar was focused on the CARES ACT, the name for the current stimulus package which was signed into law March 27, 2020. There are a few really important items which I want to share with you. There are so many that I cannot list them all.
This bill has stayed any foreclosure action on any “federally backed” mortgage loans. That includes any Freddy or Fannie Mae loans, and many others, essentially 70% of all mortgages, but you cannot assume as such. If your home mortgage is not “Federally backed” you are not protected. There is the 60 day moratorium on your mortgage payment, as well as the opportunity to get an extension of that moratorium at the borrowers request.
A borrower also has the right to request a Forbearance Agreement of up 180 days, which also may be extended. As to tenants, their rights are protected as well.
If any of the rights of any of these borrowers are in any significant way violated, a consumer can exercise their rights under the Fair Debt Consumer Protection Act.
Under this CARE act, there are three kinds of unemployment programs that apply to different criteria, but appears very generous for most, a supplemental amount above traditional benefits, and a true extension of many benefits as well. Under this bill you don’t even have to be looking for work to be applicable for unemployment benefits.
Student loans which are US government guaranteed, will have the interest on these loans waives for two months and other relief for up to six months. This does not apply to private student loans. Borrowers of these federal guaranteed student loans are supposed to receive a notice from the lender as to their rights under the CARE act. Thereafter, student loan borrowers can apply for an ” income driven ” repayment plan as well, where interest is not supposed to accrue during this repayment plan application period.
The CARE act is also supposed to protect people who would have their tax refund otherwise seized due to other debt obligations to the government.
The CARE act also allows for those who have issues which are “Corona Virus related” can access from their retirement plans up to $100,000, rather than the previous limit of $50,000.
Moreover, one can borrow from their retirement savings accounts such as a 401 (k) and allows for a longer time period to repay it .Further, any retirement money that is taken early will not be subject to the 10% penalty, and the typical income tax can be paid back to the government for up to 3 years.
This bill protects consumers to the extent that if one obtains relief from their mortgagor or their student loan lender, the creditor cannot submit a negative report to a credit reporting agency as to that consumer while they legitimately pursue their rights to a loan modification, or student loan modification.
Under this bill, a utility company can still turn off your power if one doesn’t pay their utility bill.
This bill also amends the Bankruptcy Code such that one in an active Chapter 13 can modify their plan, and essentially get an extension of that plan well beyond the current 5 year maximum plan, to an modification time frame of that plan, as well as to the amount that would be paid during that plan.
Section 7 (a ) of the Small Business Act was amended to allow for relief to small businesses who had been in business for a specific time frame over the recent past and has gross receipts less than 10 million dollars, and less than 500 employees . These entities can be eligible for an emergency loan of $10,000.00 and also apply for a loan designed to help cover payroll, and such benefits are based upon the size of the entity’s payroll. Some of these loans may not have to be paid back based upon specifically design criteria.
Frankly, there is so much to discuss I could write for many more hours. For those who wish to inquire further, please call 845-639-7011.