The COVID-19 pandemic shook the world in all corners of businesses and left a mark on our way of life we will never forget. When significant events like COVID-19, many essential things fall through the cracks. One of those is debt, either from businesses or consumers. The pandemic caused most of the debt problems, but there were many people with outstanding balances before the epidemic began. When businesses fall into debt, it is up to the attorneys on how to collect business debt. The COVID-19 pandemic made things very difficult for the world.
COVID-19 and Business Debt
There is no argument from anyone that 2020 will go down as one of the most notorious years to remember. Not only America was shut down, but the entire world was closed for business. Only essential companies were open, which means only crucial companies could pay their bills without having to dip in the rainy day funds. Those who had to dip into their funds and close their doors during the several months required fell deeper into debt. Some unfortunately never made it out of the pandemic. Those businesses had to close their doors for good. These times have left many people in the hole while facing debt collectors.
Debt Collectors Working with Businesses
Since these times are difficult, business owners who were unable to pay their debts need help. Many referred over to the National Foundation for Credit Counseling (NFCC) to receive further assistance. Surveys show the numbers tripled for both businesses and people suffering from little to no income during the pandemic. So how does one pay their debt when they lose their job or their business? It is up to the debt collectors to show some form of mercy, negotiate, and work up a budget plan. Some have deferred payments. Others took lesser amounts than the payments due during these months of dealing with the coronavirus. Postponement was the number one option, but the most allowed was up to 90 days.
Those who remained open for business worked through the tough times, and many who were not bad off in debt find themselves in trouble now. Strategic spending became business owners a new way of life to have more money to put toward their debts. Many times in these situations, the economy will feel the debt from businesses as employees are laid off or let go as businesses close. The government has given additional help for businesses, and the debt collectors know this.
Stimulus and Income Taxes Garnishments
Congress and the Senate approved SBA and EDIL Loans for small businesses affected by the COVID-19 pandemic. The president also signed it into law. As a result, some of these payments went to the business’s debt by choice of the business owner. If a judgment was in place by the courts, then the debt collectors could garnish all stimulus payments and income tax returns. Even with SBA loans, a portion of the money could be sent directly to the debt collectors. It would not affect the business owners if they can prove they used the money for payroll, rent, and utilities to keep their business going. Once verified, the loan becomes forgivable, and the business owner does not have to pay it back. Situations like these help pay off debt with the remaining balance during these times.
Pros For Using an Attorney During Pandemic
The best option to maintain a good business relationship would be going the route of an attorney. A debt collection agency only cares about getting the money owed, but an attorney can act as a mediator to keep businesses’ clients, and other business relationships intact. They also know the law from cover to cover during the pandemic and are more inclined to work with a business to come up with an agreement that works for everyone. Everyone needs to keep in mind; the lawyers are suffering through this pandemic as well since the courtrooms have closed, and law firms had to close their doors during the epidemic. They do not classify as “essential businesses.”
Getting Over the Pandemic and Debt
As we continue to see America open up more of its businesses, people have come to appreciate what they have. Business owners are no different. They felt what it is like not to have their businesses and livelihood in operation. This will stick in their minds to pay their debts, so they do not lose their business for good.