Dom: Brad Sadek. I guess the best way to introduce Brad is (by saying) back by popular demand. We did an earlier show with both Brad and Pat. Great information, great content delivered, and a lot of very meaningful information. Great to have them back on the Labor Show tonight.
Joe: Absolutely! Guys, welcome to the broadcast for part two of your discussion. Great to have you here. You guys do a lot of Union representation, Brad, how are unions and the union members that are your clients reacting to the coronavirus situation?
Sadek: Well, I help people with debt relief, and that’s a very broad spectrum that encompasses bankruptcy, debt consolidation, mortgage foreclosure, defense, and etc.
And what I see is that the unions that we help and the specific people that we represent are essential workers. Those workers are on the front lines and they’re working now more than ever. And because they’re working more than ever, they actually might have greater spending power to allocate towards their previous debts.
Maybe three or four months ago we would have considered a bankruptcy right away. Now we’re talking about other options, like maybe a debt consolidation.
Maybe some type (of solution) more along the lines of credit management where we may avoid a potential bankruptcy. Although they are working more, it’s opening up more financial doors for the union workers themselves, and we’re happy to guide them through that.
What to expect from creditors?
Joe: Brad, let me get your thoughts on this, I watched a story leading up to a news story tonight (before) going on the air with the live broadcast. There’s pressure out there for creditors – for the banks and for the mortgage holders – to have some leniency and to have some empathy.
Not to be so forceful the way, perhaps, they might be in a normal situation. Is that true? Is that what’s happening?
Sadek: Well, those creditors are actually businesses as well. What I am seeing is (for example) talking about federal student loans.
Yeah, they are deferred, they are deferred interest-free. But then we talked about more private lenders ranging from private student loans to credit cards. The problem is that credit card companies know people are home. They’re easier to find. The credit card companies are calling people more and more and more. There are some deals to be worked out but those also have to be affordable. These credit card (companies), they’re only going to stay in business if they’re collecting money.
What I’ve heard with larger expenses, and what I’m talking about is car payments and mortgage payments, I think those are the first things to really bog people down (through) forbearances. Generally, (these) forbearances are three months (only). So, if somebody has a mortgage payment of $2,000, and it’s $2,000 (due) for April, May, and June. That’s $6,000. So if there’s a three-month forbearance, that is $6,000 that is due in July, plus July’s payment.
Truthfully, I don’t think it’s enough and I think it’s an unrealistic expectation for those creditors to assume that people are going to have the money.
I think when we are back to work that we’re going to be working more, but at the same time, I don’t think our earnings are going to increase quickly (enough) to keep pace with the debts. So I think that’s going to be an issue.
But right now there’s a lot of kicking the can down the road. That’s going to come into the forefront.
Is your stimulus check safe?
Sadek: So, having said that, let’s talk about the stimulus checks that are coming in and creditors.
I’ve heard all kinds of stories on the news (about how) creditors have the first right to them if there are back payments.
Well, as far as the stimulus – if it is a creditor… if somebody owes the bank and there’s a lien on the bank, then yes, that lien would have first right to the stimulus itself. But if there’s not a judgment, then no.
If somebody owes $10,000 in credit card debt and they’re getting a stimulus of $1,200, that’s their money if it is not earmarked directly to the $10,000 of debt. Now, the problem is that somebody could use that $1,200 to pay their debts voluntarily – but no it is not mandatory.
What’s going to happen to my credit?
Joe: Yep, credit relief. Okay. This isn’t on the agenda, but I hear all kinds of things. If people are behind on bills or they’re behind to creditors – especially during the pandemic – that they’re not going to get a hit to their credit.
I mean, how could somebody be blamed for not being able to pay their bills when they’re told that they’re not allowed to go to work? What’s the situation with that, Brad?
Sadek: Well, the thing is, even though they’re not working and they’re not making the money that they used to, those bills and those creditors keep going. Especially with mortgages, credit cards, and some people continuing to incur debt during this (pandemic) because this is not an inexpensive time for people. People’s spending has shifted dramatically, but when we talk about how they are not going to be able to pay their bills — it’s an impossibility at this time.
The government has tried to step in and the government has helped. The thing is, it’s not a long-term solution. The stimulus is not a long-term solution. The solution is getting us back to work.
That’s as much a medical question as it is a legal question, but it cannot go on forever.
What is the current economic environment?
Joe: Brad, are people spending money from home?
So people are spending money, but the way people are spending money is actually shifting. I was actually reading a news article this morning and people are getting away from what we would expect (them to spend on). They are not spending money on things like gas, restaurants, entertainment, dry cleaning, and vacation.
So on those things, people are saving a lot of money. But people are spending money on things such as – and this is going to bring us all back – people are spending money on books! Book sales are up 300% this year. Cleaning supplies are up over 200%. Sports and Outdoor Equipment – great to see the kids getting out there. Toys, groceries, pet supplies, tools, and health and beauty are seeing the highest increase in consumer spending. If there is any good in this, it is those things. You know, it kind of brings us back in time almost.
Joe: Thanks so much for joining us again. I mean, you know, whenever you guys are on the (air), the bottom line is there’s not enough time because there’s so much to talk about and so much great information.
I want to thank Brad Sadek and Patrick Cooper from the law firm of Sadek Bankruptcy Law Offices for what you guys are doing.