More importantly, they have all but destroyed the San Diego economy. Unemployment is currently tracking at 15%. Five Hundred and Twenty-Five Thousand People have filed for unemployment between March and May.
Whether you own your home or are currently renting, if you are enduring financial distress, you should speak with a bankruptcy professional.
For tenants not currently able to pay rent, when this is over, there will be a bill from the landlord for all past due amounts. It is important to remember that the moratorium on evictions does not extinguish your financial liability. Most leases are too short to re-amortize the past due amounts into the lease.
For example, if your rent is $2,000.00 per month, and you fall four months behind because of the Pandemic, when the moratorium is lifted, you will owe $8,000.00. Even if you have 12 months left on the lease to include the delinquency, your new monthly rent will be $2,666.66 for the remainder of the lease.
A Bankruptcy Filing will extinguish your obligations under your current lease and allow you to enter into a new lease.
For homeowners, there has been a moratorium of foreclosures as well. What the lenders will do at the end of the moratorium remains unknown. The simplest path would, of course, be to re-amortize the delinquency into the loan and reset a new 30-year term.
But it remains unknown what they will do.
A Chapter 13 bankruptcy filing would allow you to spread whatever delinquency you have over a five year period. As well, with the inevitable drop in property values, it may be possible to remove second or third liens. If you took out an equity line and the property has fallen below the value of the first mortgage, you can petition the court to remove that lien.
We don’t know when this will be over. All we know is the damage to the economy that has been done. Retailers such as Neiman Marcus and JC Penney have already filed for bankruptcy protection. Hertz Car Rental has also filed.
Consumers often feel that they are the only ones struggling. In this time, it is definitely not the case. There is no business or industry that has not been impacted by this crisis.