Now that the presidential election is over, we can look forward to 2021 and the next four years and how Biden administration may impact consumers moving forward and in particular how these policies could impact consumers with debt and possible relief moving forward.
It should also be taken into account, that even though Biden has won the election, the Senate will likely remain in republican control and it’s likely that they will block any policies that they do not agree with, so it may be difficult for Biden to pass any meaningful legislation that may assist consumers without bi-partisan support. With that said, Biden could attempt to bypass the senate and sign executive orders into law, which may be challenged in courts. I had the opportunity to discuss how a Biden administration May Impact Consumers on 1150am KKNW and you can listen to that show here:
Will President Biden Propose Bankruptcy Reform?
It’s possible the bankruptcy code could get a major update, the first since 2005, although that may also be wishful thinking unless there is bi-partisan support. Under a president Biden, he would support making filing bankruptcy more affordable for those who need to file, possibly making student loans dischargeable again, and possibly increasing exemption limits related to vehicles and homes.
Contrary to what most folks think, bankruptcy filings have been way down in 2020. This could be up to 40% in some states as there have been moratoriums on foreclosures, paying rent, and stimulus provided to assist Americans. With that said, at some point, common knowledge suggest that there will be a wave of bankruptcy filings once foreclosures, collections and evictions work their way through the legal system and Americans look for options, whether that be to make up arrears on their homes or to discharge debt that was incurred in order to help survive the COVID-19 pandemic.
How Biden Administration May Impact Consumers Rent and Mortgage Payments?
Based on recent information, I would say the answer is likely yes that the President will look to advance legislation that will forgive back rent owed and provide more streamlined options for homeowners who have fell behind on their mortgages.
What this may look like isn’t clear at the moment and anything approved would likely need to pass a republican controlled senate. Therefore, this may take the form of some sort of bi-partisan modification program where arrears could be placed on the back end of loans and interest rates lowered for those affected by COVID-19. These programs could be similar to the ones seen after the 2008 great recession in order to provide options to homeowners who were seeking to retain their homes after they fell behind.
At some point the government is going to have to address how to bail out homeowners who simply cannot catch up on rent and mortgage payments that they have fell behind with and modification of terms would be a good compromise.
Will President Biden Propose Student Loan Forgiveness?
Student loan reform may be difficult in a President Biden administration unless there is bi-partisan support. With that said, Biden has supported allowing student loans to be discharged in bankruptcy expanding forgiveness up to $50,000 for public service employees or 50% of debt after five years, adjusting income based repayment plans with those making less than $25,000 a year, having to make no payments and forgiving $10,000 in student loan debt for all borrowers.
Will President Biden Institute Economic Lockdowns to Combat Corona Virus?
At this time Europe has started further lockdowns of their countries as COVID-19 outbreaks continue to rise as of November 2020. President elect Joe Biden has encouraged everybody to wear masks and to further help in containing COVID-19 he may institute a nationwide lockdown to keep the virus in check.
This will be opposed by many business owners as they will not be able to operate their businesses and they may be looking at options to address their debt issues such as bankruptcy or debt settlement.
Will President Biden Propose Additional PPP Assistance and Stimulus?
The government has been trying to pass a new stimulus package and come up with more clarity on PPP forgiveness, but thus far the stimulus has not passed. It is expected that COVID-19 will get worse, before things get better or a vaccine is introduced which may not be until later in 2021 when it has mass adoption.
Therefore, it is highly likely another round of stimulus and PPP will be approved by the government. For some business it may be too little too late, but for others it can be a lifeline to keep their businesses operating or to be able use those funds to pay rent and mortgage payments moving forward.