Many consumers and small businesses are experiencing extreme financial hardship during the current Covid-19 crisis. The fallout from this crisis is yet to really be understood but having experienced the Great Recession, it seems and feels similar to if not worse than that time period. Millions of consumers and small businesses will ultimately default on their debts by no fault of their own. The state and federal response to help consumers and small businesses has been inadequate if not unacceptable at best. Many consumers have not been able to obtain unemployment in New York because the system literally crashed and small businesses who were promised help via an SBA PPP loan are still waiting for relief weeks after the program was released.
However, there are options during this extremely difficult time and there may even be a silver lining for some consumers or businesses that were already struggling before the crisis. Most banks, debt buyers, debt collectors, and collection law firms must be extremely concerned about the vast number of defaults coming. We can confirm this from having talked to them over the last few weeks. This means that there is a prime opportunity to either settle matters for even less than what these creditors would have accepted just a few weeks ago or this may be the ultimate push to finally file for bankruptcy and receive a full discharge for all of the debt accrued by a consumer or business.
To recap the best two options are:
- Negotiate a settlement for even less than what the creditors would have accepted before Covid or
- Declare Bankruptcy to discharge every penny of debt and receive a fresh start
We will continue to discuss which of these options makes sense for whom in the next part of this series.