Jen Lee

January 6, 2021 By Jen Lee Leave a Comment

A Lesson in Internet Headlines

Yesterday (January 5, 2021), news websites reported the following two headlines:

PANDEMIC SPURS MOST BANKRUPTCY FILINGS SINCE 2009
The sky is falling, the sky is falling!

BANKRUPTCY FILINGS HIT 35-YEAR LOW THANKS TO GOVERNMENT PANDEMIC AID

Wait, what? I thought the sky was falling.

How can both of these headlines be true? Because the reporters cherry-picked statistics to make the most sensational headlines. As far as business bankruptcies go, it’s true that bankruptcy filings were way up in 2020. However, consumer bankruptcy cases were way down in 2020. So, it was the best of times, it was the worst of times.

To explain, businesses struggled with shutdowns and lack of funding to pay leases, payrolls, and expenses with no revenue. Many businesses have held off filing for bankruptcy to see what a recovery may look like before jumping into bankruptcy, but many were not able to hold off, which resulted in high business filings compared to recent years.

However, consumers and individuals are currently struggling with how to predict the future. It did not make sense in 2020 for most people to file bankruptcy without knowing what debt and income looks like going forward. Also, the pandemic unemployment helped many people stay current on bills. Finally, the eviction and foreclosure moratoriums, along with court closures, have made it less urgent to file immediately to stop those proceedings.

So, take your headlines with a big grain of salt these days. It also helps to remember that you are not alone in facing difficulties. Get advice for your specific situation and use the tools that are available to you.

This is just a basic overview and is not legal advice specific to your situation. If you have questions about your rights when it comes to debt and credit, you should speak with an attorney in your area for legal advice. If you live in California or North Dakota and would like to speak with Jen Lee Law regarding your situation, please schedule an appointment.

June 15, 2020 By Jen Lee Leave a Comment

I Didn’t Know You Help With That!

I always say that one of the most frequent sayings I hear is, “I didn’t know…” and it happened again on Friday.

I was reminded this week that people may not realize how we help individuals and business owners with debt and credit strategy (or maybe what that means). A networking partner reached out to me to ask when I would get involved with a business that has not been able to operate due to COVID-19 and had some debt they were worried about how to pay.

Here was my response:

Thanks for your email! I’ve been doing a lot of strategy sessions to look at various options for businesses. We generally are looking at potential personal liability on the debts, what happens if revenue doesn’t come in, and the possibility of settling debts when needed. Also, if there’s a personal guarantee on the lease, that’s something that would need to be planned around.

The session on my website is offered as a COVID-19 Financial Stress Strategy Session (link in my signature).

The networking partner responded that she had no idea that I did these 1-hour sessions and that is a very valuable resource for those needing advice.

This really gets to the heart of getting advice at the time it is needed instead of waiting until it’s too late or trying to book free consultations with various attorneys to piece together advice. Many of our clients do not need expensive legal solutions or a bankruptcy. They just need to make sure they are on the right track and not making more mistakes that will lead to expensive legal solutions or bankruptcy in the future. That’s what our strategy sessions offer. Clients leave with a plan, an outline of options, and a discussion of pros/cons of those options.

So, yes, I help with that!

March 30, 2020 By Jen Lee Leave a Comment

The CARES Act and the Paycheck Protection Program: What You Need to Know

Lots of information out there about the new CARES Act and what it purports to do. It’s a huge document and has a lot of moving parts. In an attempt to pull out useful information for the average consumer and small business owner, we are working on a series of blog posts to help answer some questions.

One of the most interesting sections discusses a new loan program for small businesses that has an element of forgiveness involved. A chief complaint of SBA loans is that businesses were already saddled with debt and adding more debt may not make sense or even be feasible in the long-term. Enter the Paycheck Protection Program (PPP) loan.

The PPP is different than the disaster recovery loan that many have already tried to apply for in the past week or two. Applications are not available yet and documents, procedures, and communication with banks are still being established. The program offers cash flow assistance to small businesses with fewer than 500 employees.

The amount available is equal to 2.5 times the average monthly payroll costs or $10 million, whichever is less, and the average monthly payroll is based on 2019 payroll figures. Monthly payroll costs not only includes wages for employees, but also paid sick leave, health insurance premiums, payroll taxes, and other benefits. The loans are intended to cover payroll costs, business disruption, health insurance premiums, lease or rent expenses, and utilities.

A very important detail is that the loans will not be personally guaranteed or require collateral, which is very different than most SBA products previously on the market.

Now, the forgiveness part, which we should all be looking at to figure out the terms and conditions. Loans under the PPP may be fully or partially forgiven. Loan proceeds used to make payroll, pay utilities, rent, mortgage, and existing business debt may be forgiven, dollar for dollar. However, in order to receive the dollar for dollar forgiveness, employees need to remain employed and paid through the end of June.

Keeping complete and accurate records will be key to the forgiveness of these loans. You have to be able to show what the funds were used for, that those uses qualify under the program, and that you kept payroll going through the end of June. The better your records, the easier it will be to have the loan reduced on a dollar for dollar basis.

The PPP loans will be offered through local banks, not directly from the SBA. If you need connections to a bank offering these programs, please feel free to email me.

March 28, 2020 By Jen Lee 2 Comments

The CARES Act and Chapter 13: What You Need to Know

The CARES Act has some specific protections for debtors in Chapter 13. For background, a Chapter 13 bankruptcy is a reorganization plan where you create a plan to pay back some or all of your creditors over a period of three to five years. All of your creditors get a copy of your plan and have the chance to object towards the beginning. Once the judge confirms the plan, you continue making a monthly payment to the Chapter 13 Trustee as outlined in your plan document.

The reason for the background is that the CARES Act allows us to stretch payments up to seven years, instead of the five-year limitation under the bankruptcy code. This is to allow people to be able to catch-up on payments and to keep plans from failing when people cannot make payments during this uncertain period when incomes have significantly dropped. However, in order to take advantage of this new provision, the Chapter 13 Plan has to be a CONFIRMED plan before the date of enactment of the CARES Act. That means that anyone who has recently filed a Chapter 13 case where the plan has not been confirmed yet may still be stuck in limbo with no income, but no way to extend payments.

If your Chapter 13 plan has already been confirmed, the new Act allows for modification and the extension of payments, but no standard procedures have been implemented yet for how those modifications will be done. Under normal circumstances, we file a motion to modify, send out the plan to all creditors for review, and then if there are no objections, the modified plan is approved. Keep in mind that we probably will want to modify after income has stabilized so that we can propose a plan that you can actually keep up with for the rest of the case.

If you are in a Chapter 13 plan now, you should try and make some sort of payment towards your plan each month, even if it’s not a full payment. When we go back to reconcile total payments, that will help in keeping a reasonable monthly payment going forward.

The important part of being in a Chapter 13 case is to communicate with your attorney. The CARES Act passed yesterday, but it’s going to take several months for many to catch-up on payments, especially those who are self-employed or contractors.

March 27, 2020 By Jen Lee Leave a Comment

The CARES Act and Student Loans: What You Need to Know

Student loans are discussed in § 3513 of the bill and there is some relief available, provided your loans are Direct Loans or FFEL loans owned by the U.S. Department of Education. Private loans, Perkins Loans, and FFEL loans not owned by the U.S. Department of Education are not protected by the CARES Act.

If your loan is covered, payments are suspended through September 30, 2020 and no interest accrues during that time. The suspension months also count towards forgiveness programs if you are enrolled in one.

In addition, if you have a wage garnishment or your tax refund is subject to interception for delinquent student loans, those collection efforts are suspended. Credit reporting during this time period is also included in this section and any payment that is suspended is treated as if the regularly scheduled payment had been made by the borrower.

Starting on August 1, 2020, suspended student loan borrowers will receive notices regarding when the normal payment obligations will start again and that the borrower has the option to enroll in income-driven repayment options at that time.

If your loan is not covered under this program, you will want to reach out to your lender or servicer to discuss forbearance options, the terms of a forbearance, and how to apply. Also, it is very important that you find out how the forbearance will be reported on your credit and understand how it may affect your future ability to obtain credit.

A Lesson in Internet Headlines

I Didn’t Know You Help With That!

The CARES Act and the Paycheck Protection Program: What You Need to Know

The CARES Act and Chapter 13: What You Need to Know

The CARES Act and Student Loans: What You Need to Know

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