Good Friday to you! I have been trying to blog & update on these topics, so wanted to take a moment to summarize and update, since information seems to get stale after a few days.
Theisen Law policies during the Stay at Home order
I first posted about this on March 12 when the pandemic was just starting. We have stayed ahead of the curve, and have been working from home since then. While we are deemed “essential workers” as we are helping people save their homes, we choose to work from home. The courts remain open, and bankruptcy meetings are being done by teleconference or videoconference. Fortunately the transition to working from home has been fairly seamless. We do stop in the office from time to time, so if you need to drop things off, if nobody is there, you can either slide papers under the door, (don’t leave cash without a receipt!), or there is a lockbox for parking fees outside of the Anoka office. (If you drop anything there, let us know as we don’t check that frequently.)
While walking down a sidewalk with my wife the other day, I saw a lot of inspirational messages, which in turn inspired me to take this opportunity to simply serve my clients to an even greater degree. Thus, I am working harder, not charging extra fees, and none of my clients will be penalized because of the pandemic. No unreasonable request for accommodation will be denied by my clients.
I was instrumental in getting a couple of rules changed by the local courts – in bankruptcy filings, wet signatures are no longer required, so we can either use an electronic signature, which requires downloading an app, using a finger signature on a person’s phone and getting credentials etc., or just an email declaration that they have read everything. I also suggested, and the Minnesota judges approved my suggestion, that the 14 day deadline for completing a bankruptcy petition when an emergency filing is made, be extended to 30 days.
While we remain open to serve new clients as always, my primary focus is serving my existing clients, so please don’t construe this newsletter as an attempt to drum up new business — I am simply trying to provide useful information to my existing clients, and the public as a whole.
New laws & policies for debtors in chapter 13
I have gotten a lot of calls from my clients who are in chapter 13 and can no longer make their payments. While the Chapter 13 trustees in Minnesota have relaxed their discretion in bringing motions to dismiss cases, they recognize that we are all in this together, and they will work with debtors on a case-by-case basis to ensure that anybody who wants to stay in chapter 13 will not get dismissed. Usually the best way to do this is by way of plan modification. The stimulus checks will not need to be paid into a chapter 13 plan. Debtors who have a confirmed plan that requires excess tax refunds or bonuses to be paid into the plan, may modify their plans to retain those funds, with less resistance than normal from our trustees.
One provision of the new chairs act, is that if a debtor in a confirmed chapter 13 plan has had their income affected by the pandemic, they can modify their plan to extend it out an additional two years, thus skipping and/or lowering payments.
Relief for self-employed
$10,000 advance grant for business
I previously posted about the awesome things Congress was doing for small businesses, including the $10,000 grant that a self-employed person was supposed to get within three days, after spending five minutes filling out an online form with the SBA. Well apparently, the Trump administration changed the rules on the SBA website, and is now saying that it is “up to $10,000” per business, based on $1000 per employee. It sounded too good to be true.
Paycheck Protection Program
The paycheck protection program is still the way for the self-employed and small businesses to get free money, which requires applying through a bank that is approved to do SBA loans, and many banks, due to overwhelming demand, are only doing business with their own customers. When this program was announced on the evening of April 2, a couple of banks were open on April 3, Wells Fargo had a small window of time that it was taking applications over the weekend of April 4, then stopped, and has now opened up again, and as indicated that they are taking applications in the order received.
Eligibility for unemployment benefits has been relaxed, and there is an additional $600 from the federal government (although the people I have talked to, got their $600 instead of their state benefits this week, so they might not be getting added together, even though the deed website still says “Under the CARES Act, you will continue to receive your regular unemployment benefit amount. You will also receive $600 per week of additional compensation”).
The big new change is that the CARES act provides unemployment benefits for the self-employed. They are still ironing out the rules on that, and have indicated it should start rolling out by the end of April. If you are self-employed, or even a gig worker such as delivery driver, and have found yourself unable to work, it is important to apply for the unemployment now, and to continue renewing every week.
New Student loan policies
There are several new programs which apply to federal student loans, which comprise 88% of the loans that are out there. Essentially, interest and payments are being suspended, and people in public service forgiveness programs are getting these months counted toward their 120 months. It has been difficult to permit chapter 13 debtors to remain current on their student loans, but the fact that payments are now zero dollars, gives us an opportunity to have chapter 13 debtors, particularly those with the public service forgiveness program, back into an income contingent plan.
I blogged about this a couple of weeks ago. One update, is that if the IRS does not have your direct deposit information, for instance because you haven’t gotten a refund in the past, they have indicated it could be several months for paper checks to go out, and they are going to be posting a form or website where people can submit or update their banking information to get direct deposit.
Caveat: If the last tax return you filed was joint, and you have since divorced and don’t have control over the bank account where your last refund went, you should contact the IRS right away.