Eighteen months into the COVID-19 pandemic, the only certainty moving forward is more change. Going into the first shutdown, most blue-collar people were terrified: furloughs, layoffs, and near-certain financial struggles were on the horizon. But, the government stepped in and doled out increased unemployment benefits, stimulus checks, and perhaps most importantly, an eviction moratorium that would provide protection to renters who could not afford their homes. It is hard to struggle with no paycheck, but it is much easier to recover financially when you at least have a roof over your head.
On the flip side, we’ve all heard the grumblings of landlords who haven’t been paid by their tenants in months. And with no way to evict, they are stuck paying the mortgage with no income from the property. Everyone feels for the tenant, but what about the landlord facing foreclosure or bankruptcy due to months of unpaid rent?
Now that we are eighteen months in, many of these relief programs are expiring. One of them, the moratorium on evictions, has been in the news pretty consistently as summer turns to fall. The federal moratorium expired, was reinstated by the Biden administration, and then was subsequently nixed by the US Supreme Court. States and municipalities are now scrambling to decide whether to provide their own marred moratoriums.
For lawyers handling landlord-tenant issues, this is obviously something you need to watch closely. Illinois and New York have issued their own moratoriums, and other states are considering doing so, while other states will likely decide to go the other way and provide no further protection for renters. Even cities and counties may make their own rules, which will undoubtedly lead to more litigation and confusion. The situation is changing by the minute, which can be good news for lawyers who bill by the hour.
What this really portends though is the decline of federal relief programs generally with regard to the pandemic. We have already seen most stimulus programs, as well as extended unemployment benefits, dry up around the country. And despite surges in COVID-19 and new variants emerging, there has been little to no talk of additional shutdowns. No relief, and less government intervention, means we are quickly accelerating to the point where people who are struggling economically due to the pandemic, and those who have been deferring their rent owed, and even those poor landlords who can’t afford their mortgages, are soon going to have the bills come due with no help from above.
Can you see where we are going with this? Bankruptcy filings. Everybody has been predicting an economic downturn and a wave of bankruptcy filings since the beginning of the pandemic, but the constant stream of federal relief programs has kicked that can down the road. Well, the rent is now due, the bills are in, and if they can’t be paid, people are going to have to turn to the bankruptcy courts.
And of course, don’t forget that filing bankruptcy is yet another strategy to postpone an eviction. A bankruptcy filing typically leads to an automatic stay of litigation and other lawsuits, including eviction proceedings. While the stay order will delay the eviction, in most states it will not prevent it. However, in some states, you can cure a rent deficiency through a bankruptcy filing if you are able to pay all of the back rent. For renters, a bankruptcy buying a couple more weeks through a bankruptcy filing, especially if they were going to be filing that bankruptcy anyway, could be an important bridge to finding a new home, especially since the federal moratorium ended so abruptly. For landlords, a tenant’s bankruptcy represents one more hurdle to restoring your income stream from your property.
For your law firm, if you wish to take on additional bankruptcy work, there is always the option of accelerating your marketing efforts in preparation for the upcoming wave. However, given the multiple false starts on potential bankruptcy waves in the past, it may be wiser to invest your money in a pay-per-lead solution where you are not outlaying costs on marketing that may or may not pay off — you are just paying for leads of people who have an interest in the services you offer. Contact Legal Brand Marketing for more information and Bankruptcy pay per lead availability and pricing.