Today, March 25, 2020, it appears that a deal has been reached between Congress and the Trump Administration, but the details have not been ironed out. On its face, the deal would provide direct payments of up to $1,200 to most adults and expand unemployment insurance. It also includes a $367 Billion Dollar program for small businesses, to allow them to pay employees who have to stay home due to the coronavirus pandemic.
Live Updates on COVID-19 Related Strategies
[March 27th, 2020 3:00pm]: Bankruptcy Relief Expanded Under the Coronavirus Aid, Relief, And Economic Security Act (CARES Act)
The House of Representatives has just passed the Senate version of the Cares Act. It now goes to the President for signature. Thankfully, consumers and small businesses in need of financial relief due to the Coronavirus will have expanded protection under the Bankruptcy Code.
Some key bankruptcy provisions under the Cares Act are as follows:
- Increasing the Small Business Reorganization Act of 2019 (SBRA) limits under the eligibility threshold for businesses filing under new subchapter V of chapter 11 of the U.S. Bankruptcy Code from $2,725,625 of debt to $7,500,000. It has a sunset provision, however, and the eligibility threshold will return to $2,725,625 after one year.
- Amending the definition of “income” in the Bankruptcy Code specifically for debtors under chapters 7 and 13 so that coronavirus-related payments are not treated as income for purposes of filing bankruptcy.
- The coronavirus-payments do not count toward the calculation of disposable income for purposes of confirming a chapter 13 plan, making it exempt from that calculation.
- Allowing individuals currently in chapter 13 to seek payment plan modifications if they are experiencing a material financial hardship due to the coronavirus pandemic, including extending their payments for up to seven years after their initial plan payment was due.
Providing temporary relief for federal student loan borrowers by requiring the Secretary of Education to defer student loan payments, principal, and interest for 6 months, through September 30, 2020, without penalty to the borrower for all federally owned loans
[March 26th, 2020 4:17pm]: Today, March 26, 2020, President Donald Trump has approved a disaster declaration for New Jersey. This will allow for federal funding and assistance for all areas impacted by the coronavirus pandemic. This declaration will allow NJ to lift remaining bureaucratic barriers to assistance and enhance the State’s response to COVID-19. The Federal Emergency Management Agency will now be able to provide direct support to the recovery efforts to COVID-19 in New Jersey.
This Blog will be updated regularly to outline different strategies on where to turn in this financial crisis due to the Coronavirus (COVID-19) with an extra emphasis on New Jersey. Our law firm’s emphasis is representation of individuals and businesses in bankruptcy. Many of these strategies are to try to avoid bankruptcy. If a bankruptcy is needed, we are of course there to help you navigate the situation and our New Jersey lawyers are there to help you solve your problems. Let’s look at some strategies and helpful options:
Small Business Loans To Get You Through the Coronavirus Shutdown
The U.S. Small Business Administration (SBA) is making the process for receiving disaster assistance much faster and easier. Now with the new deal in Congress more money should be made available. The SBA's Economic Injury Disaster Loans can offer up to $2 million in assistance for a small business, which should provide temporary relief to help mitigate a loss of revenue the businesses have been experiencing due to the Coronavirus. Resources and information that have become available at www.sba.gov/disaster-assistance/coronavirus-covid-19 and www.covid19.nj.gov.
Taxpayers have an unprecedented tax payment extension from the Fed for 90 days, until July 15th. This is up to individuals and small business owners of up to $1 million in taxes owed, and up to $10 million for C-Corporations.
However, taxpayers still need to file their taxes or extensions. Still file or extend by April 15th. There are penalties if you don’t file, but again, no penalties or interest if you don’t pay (for up to 90 days).
Unemployment Benefits Expanded Due to Coronavirus
Unfortunately, many businesses are going to be forced to lay off, furlough or reduce the hours of employees. If you lose all or part your paycheck through no fault of your own, you can apply for unemployment benefits. You can on the New Jersey Department of Labor website.
Typically, you are eligible for up to 26 weeks of benefits, but there are certain requirements you must meet. However, if your workplace temporarily or permanently closed because of coronavirus, you could be eligible for unemployment benefits without meeting those requirements. The New Jersey legislature is also currently debating expanding current unemployment benefits.
Deal with your Banks Now
If you are falling behind or afraid you will be unable to make your mortgage payment or credit line payment, start by contacting your Bank early on. Banks and lenders want to get paid and most will be willing to work with you. You will be in a much better position if you contact your lender before you are late or miss a payment. Even if you have missed payments, contacting and working out a deal to catch up is much better than just ignoring the problem.
There Are Also Protections from the State of New Jersey
Governor Phil Murphy in New Jersey has signed a bill that gave him the authority place a moratorium on evictions of homeowners amid foreclosure proceedings, and he signed an executive order to “immediately suspend” such actions. The order would remain in effect for no longer than two months following the end of the state of emergency declared by Murphy. Be careful as Banks can still pursue foreclosures but would not be able to carry out a removal until the order is lifted.
Governor Murphy also urged “in the strongest possible terms” that lenders “do what they can for their mortgage customers to make loan repayment much more flexible in coming weeks and months.”
Foreclosures on mortgages through Fannie Mae or Freddie Mac, those foreclosures are on hold for two months. Different states are imposing different rules in this area and you should check the State you live in to see what is available. Each State has Coronavirus site dealing with these issues.
Utility bills and relief in light of Coronavirus
New Jersey’s major utility companies said they will keep on gas and electric service for customers who don’t pay their bills during the coronavirus outbreak and shutdown. “In the interest of protecting public health, PSE&G is temporarily suspending shutoffs of electric or gas service to residential customers for non-payment,” PSE&G said in a statement. There are already programs in place to help you. Check here to see qualifications for energy assistance programs in New Jersey.
Food Help for Coronavirus Victims
Food programs, such as NJ SNAP, or New Jersey’s Supplemental Nutrition Assistance Program is in place to help low-income families buy the groceries.
In addition, for those with children at home remember your local school district is providing meals to more than 500,000 students who qualify for free and reduced-costs meals. If you think your child now qualifies, learn how to apply here.
Food Panteis and banks across the state provide relief. The NJ State Legislature passed a bill to send $15 million to food banks in the state, including the Community Food Bank of New Jersey, the Food Bank of South Jersey and Fulfill of Monmouth and Ocean counties. There is a lot of information about various programs on food resources here.
Student Loan Payments Relief In Light of Coronavirus
Student Loan assistance is available for borrowers repaying loans through the New Jersey College Loans to Assist State Students (NJCLASS) program.
The New Jersey Higher Education Student Assistance Authority (HESAA) will offer assistance to those who need help making regular payments to NJCLASS student loans due to a diminished income. The HESAA website said those affected by coronavirus can apply for NJCLASS loan relief for temporary disability or unemployment. Click these links for the applications for the unemployment relief options and temporary disability relief options. NJCLASS borrowers can apply for financial hardship relief. That application can be found here.
The U.S. Department of Education has suspended payments on federal loans while setting interest rates of these loans to zero during the national state of emergency.
Furthermore, on the Federal Level, Secretary Betsy DeVos directed all federal student loan servicers to give administrative forbearance to any federal loan borrower who requests one. The forbearance would be in effect for a period of at least 60 days, beginning on March 13, 2020. An automatic suspension of payments for any borrower exists who is more than 31 days delinquent or becomes more than 31 days delinquent as of March 13, 2020.
Business Interruption Insurance
If you have business interruption insurance, you may have a claim for your business being shut down. Many of these policies have exclusions for virus pandemics such as the Coronavirus. A potential argument around this exclusion is that the government has forced a shut down in business.
The law interpreting virus exclusions is not developed, and various arguments can be advanced. This coronavirus presents a unique situation in which many businesses now find themselves. The strongest arguments on these policies is the civil authority provisions which may provide coverage for losses suffered in connection with a governmental order prohibiting access to a covered location. Issues of what constitutes physical damage or loss will likely arise in this context. It is imperative that you check the specific terms and construction of your insurance policy, and how they operate in the specific context of your business's losses.
There is also pending legislation proposed to address the issue of covering losses from the coronavirus. You can review New Jersey Assembly Bill 3844 and Statement here. Presently, the bill only covers businesses with fewer than one hundred employees.
Our firm is keeping abreast with the law in all of these different areas in order to keep our clients fully informed. If you are disputing a covered loss with an insurance company, please give our firm a call. On any of these areas, our firm will provide a free remote consultation. We have video conferencing or a simple phone call to assist you. As the new laws and programs develop our firm will continue to update this blog.