With state courts largely closed to many hearings regarding debt collections, one obvious consumer target are those with credit card debt. Wage garnishments are already happening across America and more and more citizens with debt are being garnished even while less court hearings are taking place.
To prepare for the onslaught of lawsuits, attorneys are offering protections through bankruptcy and other legal support mechanisms. Protecting clients from wage garnishments, evictions and debt collections during the pandemic is a very large undertaking. There are simply not enough lawyers in Hawaii to protect or even help everyone with advice.
The numbers generating this net-debt-effect on the general population aren’t being tracked. So understanding how many people are currently being affected apparently is not yet news worthy. But the weight of debt does not end peacefully. Creditors have elephant-like memories and debt collectors are tracking their targets. So who are the main targets facing the big three actions from the banks?
- Essential workers who were barely making ends meet before the pandemic are targets as credit card usage rises.
- Front line workers who have had increased costs from school closures. This group might seem protected but collection have very low thresholds for those who are too busy to stay on top of their personal budgets.
- Job seekers who either lost their jobs or have had their hours cut are not immune from the virus or collection activities by banks.
- Higher than average wage earners who regularly run up credit card debt and lapse in payments are at risk.
Like front line workers small business owners have had some protection from landlords but those who miss bills or simply struggle to get caught up are easy targets. The perception being an ability to repay when the pandemic is over.
Small business owners who have had to close due to stay at home orders or decide to stay safe from gathering customers into a single location are at risk. When a business closes there is often leftover debt. This debt is a likely target as new income or pivoting to a new business model is often elusive.
Minorities are already being hit the hardest. For example, “ProPublica has found that it hits workers earning $40,000 or less the hardest and is particularly common in predominantly black communities.” Source
“It is clear that is only a down payment on the financial support that will be necessary to make apartment residents and owners and operators whole – Moody’s Analytics has estimated that back rent debt had reached $70 billion by the end of 2020 alone.” This correlates with data from “Entrata Inc., a digital property-management platform that pulls information from more than 20,000 apartment communities, showed a 13% increase in credit-card usage in April” according to the Wall Street Journal. Source
Debt collections might be slow at the moment but thousands of lawsuits are already being filed in local courts. When these courts return to normal operating capacity, federal funds will help these courts hire more workers to process debt collection efforts. A large wave of bankruptcies is likely coming. Hawaii courts will be very busy in the coming months and years.
Hawaii Debt Solutions recommends preparing. We have a simple online form to prepare your information and request a free consultation. This is the time to seek advice and become a client. When the wave comes, existing clients will have the upper hand and more options for financial recovery. Others will be stuck trying to understand why the system might not be working as well.
Fill out our 30 second form and gets some free advice. We are a proud provider of local debt solutions for folks in Hawaii. We specialize in helping clients who cannot afford to hire expensive lawyers or need a payment plan to get started.
Visit HawaiiDebtSolutions.com Covid relief resources page for short videos on eviction moratoriums, stopping debt collectors, and preventing wage garnishments before they happen.