Here is a summary of some recent bankruptcy and related financial developments in Western New York:
1. The courts are still holding all hearings by phone until at least October 31, 2020. This is particularly good news for the elderly and vulnerable people in our community. If you are considering filing bankruptcy, we encourage you to take advantage of this phone process. Many people have anxiety about appearing in court and we can tell you with certainty that the phone process virtually eliminates that anxiety.
2. The courts are still being very flexible for chapter 13 cases in which clients are unable to make payments due to Covid 19 loss of income. For a few months, none of the judges were dismissing cases at all for virtually any reason. While we are getting back to a more “business as usual” process, there is still considerable leniency being offered.
3. Auto lenders are being very aggressive in their collection efforts. We have never seen car lenders being as quick to repossess cars as they are now. The moratorium on certain credit activity and court filings in New York never applied to repossessions. It appears car lenders believe there is a huge wave of defaults coming and we agree with this view. If you are behind on your car loan or upside down on your payments, please talk to a bankruptcy lawyer about your options.
4. Foreclosures and collection lawsuits are starting again. Although the foreclosure volume is still low, this is only because lenders have been restricted from filing foreclosure actions unless they can certify that the borrower has not been financially impacted by Covid 19. However, that certification is no longer required. Collection lawsuits on credit cards and other debts are being filed in large numbers.
5. Property tax foreclosures are resuming in some counties. Erie County has started its tax foreclosure process despite obvious negative publicity this action will recover. But the counties and cities need the money, and it’s a certainty in our opinion that all municipalities will become more aggressive over the coming years in tax enforcement. If you cannot pay your taxes by the date of redemption, please contact us. You may lose your home if you miss the redemption date by even one day.
6. With enhanced unemployment benefits gone, we are seeing a significant uptick in client calls. We have been fortunate in WNY that many of our larger businesses have survived. However, we know from speaking with clients that the majority of local businesses are still operating below their pre-Covid levels and we believe that many furloughed employees will lose their jobs over the next year. Almost all of our clients who are back to work have lost their overtime hours and profit sharing.
In general, our view remains that 2020 bankruptcy filings will be lower than 2019. However, we expect 2021 to be the busiest year in a decade for bankruptcies. This could cause the system to become either more strict or more lenient. It’s too soon to tell. We will keep you posted as the situation unfolds.