The next 12 to 18 months is going to be financially difficult for many of our neighbors
Our new normal is homeschooling, face masks and self-isolation. What few are talking about is the financial consequence of COVID-19. Many of our neighbors are faced with difficult choices – pay the mortgage or buy food and pay utilities?
But, I thought Congress provides resources to help those who are not receiving a paycheck
You are correct – the law is called the Paycheck Protection Program (PPP), under the CARES Act. Employers (that includes those who are self-employed) can apply for loans to keep workers on the payroll, but the employees still have to work if the employer requires it.
The application process is difficult and not a guaranty to receive any funds. It took me (a lawyer) hours to help my self-employed daughter fill out the forms and to understand the strings attached to the funds. Good news – she finally received her money, but only after two months of waiting. Fortunately, her partner was paying the basic living expenses, but still she is way behind on her other bills.
Returning to work is fine, so long as you do not have children who need adult supervision. Childcare is difficult to find right now. The parent has the additional concern about the steps the childcare provider is taking to protect the children from being exposed to the virus.
The CARES Act provided federal funds for those on unemployment ($600 per week), plus whatever the state pays. In many cases that meant the worker received far more by staying on unemployment then going back to work. As of May 1, 2020, more than 30 million Americans have filed for unemployment insurance since the COVID-19 crisis hit the U.S. (author’s opinion – Congress really did not think that one through.) Important note – unemployment income must be claimed on the worker’s tax returns.
Many low-income renters are unemployed, waiting for unemployment to come in, but faced with a monthly rent bill. Federal and statewide eviction moratoriums were put in place (generally three to six months).
This moratorium is on the tenant being evicted, it does not excuse the tenant’s obligation to pay rent. At the end of the moratorium the tenant is supposed to come up with the missing rent, or be evicted. The problem will be exacerbated because the moratorium is based on COVID-19 timetables that are “too short” and don’t consider predictions from medical experts that the pandemic could persist into the fall and beyond.
Many landlords depend on the rents to pay their own bills. The moratorium puts them facing their own default of the mortgage and possible foreclosure, resulting in their own eviction.
Evictions lead directly to homelessness, which increases the burden on the taxpayer and the various agencies that help those without a place to live. Crime will increase because people become desperate to just survive.
What about other bills?
In addition to worrying about where to live, the worker is also faced with demands from credit card companies, vehicle payments and other debts. By this time they are so desperate that many have shut down emotionally. They are not seeking help from those who can look at the big picture, rather are looking only at how to survive today. That is completely understandable, if you cannot get through today, why should you care about tomorrow? The answer – because tomorrow will always come.
Education is the key:
Our job is to help the worker step back from their current focus and talk about the future. Life will change. There will be a cure for virus. People will go back to work. Landlords will need tenants. Car dealers will need buyers. Mortgage companies will need borrowers.
I want to help the worker plan for their future. But, I am not the only one offering their help, there is a new breed of selfish attorneys who don’t care about their clients. They are only on this earth to take as much money from their clients as possible, while offering little to no education. They even have false reviews created by employees, and Internet companies. Use your common sense when talking to anyone who may have ulterior motives (take your money).
MUSINGS FROM DIANE:
When you hear “we are all in this together” stop and think – are we really? One person buys something or pays a bill, that money is used to buy more products or pay more bills. Round and round goes that dollar. So, yes, we are all in this together. I am ignoring the wealthy who don’t worry about how to pay their mortgage or buy food for their family. Instead, I am talking about the other 90 percent of our community. Congress did its best to come up with an idea about putting money into the hands of those who really need it, but much of that money was detoured into the hands of the wealthy. We must be responsible for ourselves and look for our own way out of this situation. Be smart about your choices and stay away from the “quick fixes” – they are scams.