Due to the coronavirus, Wink & Wink is conducting all client meetings remotely. However, we continue to perform all services for our clients.
The Bankruptcy Court is functioning in Colorado through the COVID-19 crisis. Wink & Wink is filing bankruptcies online and can represent you through bankruptcy discharge as usual. The primary difference in bankruptcy proceedings in Colorado from the coronavirus is that your meeting of creditors is currently being conducted telephonically. This mandatory meeting for every bankruptcy filing has traditionally been conducted in person. With Wink & Wink, you will have a call with an attorney to prepare you prior to the meeting of creditors. And that same attorney will dial into the meeting of creditors with you to make sure any issues are identified and discussed.
Debt collectors and creditors’ attorneys continue to operate through the COVID-19 pandemic. While this means that you can still get harassing calls, lawsuits and garnishments by your creditors, Wink & Wink is continuing to negotiate settlements with creditors for our clients.
A lot of the IRS is closed currently due to the coronavirus, but the collections, appeals and the taxpayer advocate offices are still open. This means Wink & Wink can help you resolve your tax debt during the crisis.
Of course, the urgency to act may be less because the IRS has suspended the majority of collections actions at this time. In most cases, the IRS will not be sending levies unless it’s an exceptional situation. However, they will not be releasing levies that were already in place.
The IRS has also postponed the deadline for individuals to file their 2019 tax returns from April 15, 2020 to July 15, 2020. If you haven’t filed your taxes, Wink & Wink can help you prepare and file them before this extended deadline.
The IRS has also stated it will not take stimulus payments to pay back taxes. And if you don’t receive your stimulus payments this year but are entitled to it, you can claim it as a refundable credit on your 2020 tax return.
The Cares Act
The Coronavirus Aid, Relief and Economic Security (CARES) Act became law on March 27, 2020. The CARES Act makes some temporary changes to bankruptcy law as well as other collection laws.
The CARES Act makes two relevant changes to consumer bankruptcy law. The first is that any payments to you receive from the federal government related to COVID-19 will be excluded from your income for purposes of the means test. These means that your stimulus payment from the federal government will not impact your eligibility for Chapter 7 bankruptcy nor will it impact the amount you have to pay into a Chapter 13 payment plan.
Unfortunately, the CARES Act does not protect your stimulus payment as an asset. This means that the bankruptcy Trustee can take your stimulus payment and distribute it to your creditors if you file Chapter 7 before receiving and spending it.
Additionally, the CARES Act allows people in Chapter 13 bankruptcy to modify their plan to extend their plan term to a maximum of 7 years. In order to extend the term of your Chapter 13 plan beyond the normal limit of 5 years, your Chapter 13 plan must have been confirmed by March 27, 2020 and you must have experienced a material financial hardship caused by COVID-19. The requirement that your plan must have already been confirmed means this change in the law only helps people who were in bankruptcy prior to March 27, 2020.
These CARES Act changes to bankruptcy law are applicable for one year, so they will expire on March 27, 2021.
The CARES Act provides for automatic suspension of federal student loan payments with no interest accruing on said loans through September 30, 2020. It is important to note that this only applies to federal student loans. This suspension does not apply to private student loans. If you are struggling to pay private student loans, you should contact your lender directly to inquire about forbearance.
Mortgages and Foreclosures
The CARES Act enables borrowers impacted by COVID-18 to request payment forbearance for 180 days for federally backed mortgages. And the forbearance period may be extended by another 180 days. Unfortunately, the CARES Act does not specify what will become of the missed mortgage payments during forbearance. It is possible the lender could require you to make up the missed payments or face foreclosure. For this reason, you should only apply for forbearance if you cannot afford your mortgage payments. And if you are granted forbearance on mortgage payments, you should consider applying for mortgage modification at the conclusion of the forbearance period because modification will likely put the arrears on the back-end of your loan.
Also, the CARES Act puts a moratorium on foreclosures for 60 days beginning March 18, 2020. This means no lender can foreclose on your home until May 18, 2020. Pending foreclosure sales will just be pushed out, so you should contact Wink & Wink right away if your home is in foreclosure.