Thomas H. Rossback Bankruptcy Attorney

At a time like this many are taking advantage of the moratoriums on eviction and mortgage foreclosure. However as with most things in life there's a catch.

The moratorium on evictions will end soon, and, it only delays eviction. The moratorium does require the landlord to first offer a "reasonable" repayment plan before proceeding with eviction. However, "Reasonable" does not appear to be defined. Furthermore if you were struggling to make your rent payments before COVID 19, you will now have to find a way to pay back the unpaid rent in a "reasonable" repayment plan. Such a repayment will necessarily get more expensive with each missed rent payment.

The foreclosure moratorium is only 60 days under the CARES Act, but offers a required Forbearance to borrowers with Federally back loans (See section 4022 of the CARES Act). However, Forbearance does not mean forgiveness. You will have to repay those missed months. How that is to happen is unaddressed in the Act. Unpaid loans will, of course, be foreclosed on. It's more likely than not that you'll have to either make additional payments on your mortgage, or modify your loan with the lender. Modification is a process I am familiar with as a bankruptcy practitioner

In short these "relief" programs only appear to delay payments. How these delayed payments will be handled is being left up to negotiations between the landlord and tenant, and the lender and borrower. In truth, this is a recipe for disaster.

Landlords with loans of their own, and lenders with huge overhead and thousands of employees, can't wait forever for regular monthly payments. The pressure to pay their bills will make them less likely to work with tenants and borrowers. Tenants and Borrowers are going to be recovering from lost income, and may not have the ability to increase their monthly expenses to pay back missed rent. In the end, Landlords and Tenants, and Lenders and Borrowers who are unable to reach agreements will revert to their default remedies. In other words, Eviction and Foreclosures.

The only general advice I can give is simple. IF YOU CAN MAKE YOUR RENT OR MORTGAGE PAYMENTS MAKE THEM! It is almost certain that you will have to make them anyways. If you can't, then work with your landlord or lender to be sure to mitigate the problem. It is almost always lest costly to be proactive and address the problem sooner than later.

Finally because I am attorney here is a disclaimer to wrap things up.

This communication is not legal advice, the communication is not intended to, and does not create an attorney client relationship. The office of Attorney Thomas H. Rossback is a debt relief organization as defined by the bankruptcy code.