Coronavirus, Debt Relief

Mortgage Debt Reaches Record High of $10 Trillion

The American housing market is booming, even though various aspects of the nation’s economy are struggling due to the coronavirus (COVID-19) pandemic.  During the last quarter of 2020, the nation’s mortgage debt load reached a record high of $10 trillion, according to figures from the Federal Reserve Bank of New York. Low interest rates for home mortgages is a big catalyst for this boom in the housing market.  

Consumers are taking advantage of record low interest rates when making home purchases. At the start of November 2020, mortgage rates reached a 12th record low in 2020.  As a result, mortgage debt jumped by $85 billion between July and September 2020, reaching a high of $9.86 trillion.  

Coronavirus, COVID-19, Credit Card Debt

How the Pandemic is Changing Americans’ Credit Card Habits

The coronavirus (COVID-19) pandemic has changed the way of life for consumers in both good and bad ways. One change has to do with the way Americans utilize their credit cards post-pandemic. 

A recent study conducted by Money and Morning Consult surveyed how American consumers have been using their credit cards during this crisis. What the study found was Americans are continuing to use their cards. However, the way by which they are using their cards has changed.  

student loan debt, Student Loans

What Borrowers Need to Know About the New Executive Order- “Continued Student Loan Payment Relief During the COVID-19 Pandemic”

A new executive order signed by President Trump is expected to give additional relief to student loan borrowers during the coronavirus (COVID-19) pandemic. It is important that all student loan borrowers be aware of what these changes entail and how they can affect their outstanding student loan balances.

At the start of the COVID-19 pandemic, Congress passed the CARES Act, a $2.2 trillion stimulus bill, that included relief effort for numerous aspects of the economy. The CARES Act paused all federal student loan payments and stopped interest from being incurred on federal student loans. Additionally, the stimulus bill put a stop to all federal student loan collection efforts. However, this bill was passed at the beginning of the pandemic with the thought that relief would no longer be needed through the end of 2020 with the hopes that the COVID-19 crisis would eventually be subsiding. Given the fact that numbers of positive cases are growing, and states are struggling to manage the crisis, it has quickly become clear that additional relief was needed. The original relief offered through the CARES Act was set to expire on September 30, 2020.

Coronavirus, COVID-19, Credit Card Debt, Debt Relief

Nearly Half of U.S. Adults Now Carrying Credit Card Debt Amid Pandemic

Credit card debt has dramatically increased since the coronavirus (COVID-19) pandemic, according to recent data from CreditCards.com. Their data reports that 120 million U.S. consumers, or 47 percent of all consumers, had credit card debt as of April 2020, which is a 43 percent increase from March.

Millennials were hit the hardest with 34 percent of them reporting that they used credit regularly. Experian, one of the three main credit reporting agencies, reported in March that U.S. consumer debt reached a staggering $14.1 trillion with credit cards making up $829 billion of this debt. This level is the highest seen since the Great Recession.

Bankruptcy Law, Coronavirus, COVID-19, Debt Relief

How Has the Coronavirus Affected Bankruptcy Filings?

Even though unemployment filings have skyrocketed, and countless businesses have been struggling during the coronavirus pandemic, bankruptcy courts have not been flooded with new cases- yet.

When compared to bankruptcy filings in April 2019, there were 47 percent fewer consumer bankruptcy filings in April 2020, according to the American Bankruptcy Institute (ABI).

Bankruptcy Law

New Bankruptcy Law Takes Effect Benefiting Small Businesses

For the most part, business bankruptcy, also known as Chapter 11 Bankruptcy, has not been a viable option for most struggling small businesses. The process can be long and complicated, and the costs associated with filing under Chapter 11 of the U.S. Bankruptcy Code have kept most small businesses out of this option, leaving them to either pursue a personal bankruptcy under Chapter 7 or Chapter 13 or to close their doors completely. However, the Small Business Reorganization Act (SBRA), which officially took effect two months ago, has taken away some of these barriers, opening the possibilities for Chapter 11 filings for small businesses.

Originally, the SBRA applied only to businesses or sole proprietors with less than $2.7 million in debt. However, when the coronavirus (COVID-19) crisis hit in March, Congress temporarily increased this debt cap to $7.5 million in debt, opening the doors to many more businesses to take advantage of the SBRA.

Bankruptcy Law, Coronavirus, COVID-19, Debt Relief

Coronavirus and the Changes it has had to the U.S. Bankruptcy Code

The coronavirus pandemic has affected our country in so many ways. It has also affected the U.S. Bankruptcy Code, specifically through the recently passed $2.2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES Act).

Within the CARES Act were revisions to parts of the U.S. Bankruptcy Code, meant to help small businesses and consumers during this difficult time. The CARES Act amended the Small Business Reorganization Act of 2019 (SBRA), which temporarily increased the debt threshold for filing for Chapter 11 Bankruptcy relief. The debt threshold increased from $2,725,625 to $7,500,000. After one year, the threshold will go back down to the original amount.

Coronavirus, COVID-19, Credit Card Debt

How to Keep Credit Card Debt Under Control During the Covid-19 Crisis

During the Covid-19 pandemic, many Americans have resorted to using credit cards to purchase basic living expenses. With many Americans out of work and stuck at home, this crisis has wreaked havoc on their finances.

Analysts at Bankrate.com estimate that over 110 million consumers entered this crisis carrying credit card debt. A great portion of this debt was already incurred by paying for necessary living expenses, such as childcare and groceries, with credit credits. These expenses also included paying for repairs to cars or homes, as well as emergency medical expenses.