Debt Collection During Economic Turmoil

The world is struggling, and it’s evident from any country. Between pandemics, protests and politics, the United States is especially struggling in its economy.

Many small businesses have restructured or filed for bankruptcy during the last three months. On top of that, the unemployment rate hit 13.3% in May – a decrease from April’s rates. Many people fear how the economy is affecting debt collection.

Collections continue

Unfortunately, many creditors continue to seek payments for debts surrounding medical bills, loans and mortgages. Some creditors try to adopt a compassionate approach by working with people who were laid off or terminated due to the pandemic.

However, it’s business as usual for most credit card creditors. They are still contacting debtors consistently, no matter the circumstances.

American officials enacted a few safety programs to help families and workers during the pandemic, including:

  • The CARES Act – a federal bill that focused on providing relief to U.S. taxpayers through stimulus checks. All eligible Americans should receive their check by Sept. 4.
  • Garnishment protection – after residents received stimulus checks, many private companies enacted garnishment protection, in which your check is protected from some debt collectors or companies.
  • Federal loan deferment – the U.S. Department of Education put a hold on all federal student loans until Sept. 30 and with no interest.
  • Local measures – some local counties, including Franklin County and Cuyahoga County, created additional protections for garnishment protections or foreclosure hearings.

However, most of these measures are optional or do not stop creditors from pursuing debt collection. It still leaves many people in a vulnerable position surrounding their finances.

Luckily, there are options, including bankruptcy. Bankruptcy is an excellent choice if you are afraid of debt collection or creditor harassment as the states open. Feel free to research and ask an attorney for more information.