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Debt in the Time of COVID-19

by | Apr 8, 2020 | Credit Card Debt, Debt Relief, medical debt | 0 comments

We are living in unprecedented times. For those that live paycheck to paycheck, barely making ends meet, living in the time of the coronavirus can magnify the normal stress of financial struggles to the breaking point. Social distancing at home, not knowing when the world will get back to “normal” (whatever that is), can let loose a serious case of the worries.

Money trouble cause us anxiety in “good” times and my fellow Kentuckians these are far from good times. As more and more of us saw our employers … our livelihoods … declared non-essential businesses, and we were told to sit home and wait it out, we have even more time to worry about money. The anxiety of not having money to buy basic essentials takes a mental, emotional, and physical toll. In “good” times, stress can kill and the anxiety of getting COVID-19 combined with the financial chaos it’s created makes our “normal” worries pale in comparison.

I live in Louisville, Kentucky and practice bankruptcy from Owensboro to Lexington and all over Southern Indiana. I have (elderly) family in Florida, a hot spot of COVID-19 cases. My business is “non-essential” and out of concern for the safety of my clients and my family (and to comply with the Governor’s orders) I have had to limit client contacts to phone and video chats. Here in Kentucky, thanks to our Governor’s quick call to action, we’ve been subject to social distancing, strategic shutdowns, and now essentially a shelter-in-place order for longer than most areas.

As someone that has helped hundreds of people through stressful financial times, here’s what I have learned as a bankruptcy lawyer about getting through the fight against this virus.

Focus on the what you need to get through this unexpected “coronacation”

Staying safe and healthy right now is what really matters. Bills and debt payments can wait.

Having food, medicine, and mental health must be the first concern. If there is ANY doubt about the ability to pay for these essentials, then do not hesitate to put off payments on credit cards, medical bills, and student loans. If the essentials are met and you have the ability, consider paying insurance premiums and car loans.

Keep in mind that the same crisis that keeps you from your job also keeps creditors from their jobs, too. I still get calls from creditors on behalf of my clients, but I can attest that the calls are being made more out of habit than anything.

Know that you are not alone

It’s easy to think these troubles only apply to “me” – I am in isolation, and I am not “venting” to my co-workers, my friends, or my barber. I no longer have the outlet for my stress. In “normal” times we view usual money troubles as unique to ourselves: the feelings of shame and defeat, the feeling of oppression, are all so personal. Being couped up alone only adds layers of anxiety.

I had a college psychology professor years ago that talked about “pooling misery” – when someone felt down or bad about something, they often found solace in the suffering of others. This phenomena did not make the bad feelings go away … but, wow, someone else feels bad too so at least I’m not alone. Well that’s where we are, we are pooling misery. And while it doesn’t make the stress go away, it does give a bit of comfort to know several millions are in this boat with me, even if I can’t see them through my social isolation.

The help that’s coming

There are things that individuals and families can do to help themselves financially right now.

In Kentucky, Governor Beshear has expanded unemployment and every night in his 5 p.m. address he encourages people to sign up. There is no shame in it – lawyers are signing up right alongside other members of the service industry.

Currently in Kentucky there is a ban on evictions and Medicaid enrollment … and to be quite honest, the Governor’s 5 p.m. address has become a nightly ritual in our house and is an enormous sense of comfort.

On the federal level, mortgage servicers are offering loan forbearance (as opposed to “loan modifications” a forbearance does not require the same level of paperwork). Creditors are offering payment and interest deferrals. The caveat is that this is not automatic, consumers must call and ask. So do it – taking charge of your financial situation empowers you, and can strengthen your mental frame of mind. When making these arrangements always get the resolution in writing – if the creditor won’t provide it, then you provide it. Get their fax number or email address and fax/email a summary of what was agreed to … create your paper trail.

Don’t forget there’s an election in November – if what the federal government has done does not feel like enough, then make your voice heard.

The wheels of justice move slowly

Even in “good” times, lawsuits take time. In the time of COVID-19 the wheels of justice have ground to a virtual halt. Courts are closed, there is speculation state courts may reopen in May but with the threat of a second acute wave of coronavirus hitting the U.S. once the social distancing requirements are lifted it’s expected that May date may be aspirational at best. The reality is that there is little immediate danger to you and yours in holding off payment on unsecured debts such as credit cards and medical bills.

The most concerning debts for people are the secured creditors with collection options that don’t require a judge’s involvement – car repossession is the major one in Kentucky. If you can’t make your car payment, call AND write the lender and tell them how you are affected by the COVID-19 crisis and ask for relief. It never hurts to ask and it lets you take control of your financial well-being.

Reach out

Even though we are practicing social distancing, banning together is critical. Whether it’s face timing with friends or family, Zoom meetups (we do this for church committees I serve on), or just posting on social media, virtual togetherness is good for our mental and emotional health and can strength our community. Take care of your neighbors. Take care of your families. Call friends you haven’t spoke to in a while and ask how they’re doing. If you’re lucky enough to be quarantined with your kids, cherish this time – my oldest is only a year away from leaving for college and thanks to social isolation I am getting to make the most of this short time remaining before he goes away.

Stay strong, healthy, and hopeful. As Gov. Beshear says every night, “We will get through this, and we will get through this together.”