I Have a Plan for That

[Steve of phpBB]

Help me save the economy.

I've drafted the outline of a proposed bill to submit to my state legislators. The idea is to have the legislature declare a "suspension period", where pre-existing debts, rents, mortgages, utilities, and insurance premiums would not need to be paid. It basically tries to impose an "automatic stay," as in the bankruptcy code, on all debts and ongoing payments.

I would - seriously - love to hear feedback if anyone is interested.

And if someone can come up with a clever name for the proposal, so much the better.

I. Loans

A. General principles applicable to all consumer or commercial loans (includes residential and commercial mortgages and deeds of trust, consumer and commercial auto loans, credit cards, student loans, deferred-deposit and check-cashing loans, payday loans, commercial loans and lines of credit)

* Stay of all collection or enforcement proceedings, including repossession of collateral or homes, initiation of new legal proceedings, and continuation of existing legal proceedings.

* This stay shall not apply to legal proceedings necessary to prevent waste or damage.

* Proceedings under this exception shall be limited to steps necessary to prevent such waste or damage.

* Failure to pay during and up to thirty days after suspension period shall not be a default or trigger any penalties or increases in penalties

* Interest or time-dependent fees shall not accrue during suspension period

* All notice and cure periods are suspended and extended for the length of the suspension period

* Failures to pay during or within sixty days after the end of the suspension period may not be reported to credit agencies

II. Leases

A. Real Property Leases

* Stay of all collection or enforcement proceedings, including acts to regain possession under unlawful detainer or similar statutes; initiation of new unlawful detainer or other legal proceedings; and continuation of existing legal proceedings.

* This stay shall not apply to legal proceedings necessary to prevent waste or damage.

* Proceedings under this exception shall be limited to steps necessary to prevent such waste or damage.

* Failure to pay during and up to thirty days after suspension period shall not be a default or trigger any penalties or increases in penalties

* Rent or other regular payments or fees shall not accrue during suspension period

* However, actual costs incurred by lessor during the suspension period may accrue during the suspension period. At the end of the suspension period, such costs may be allocated on a per-unit basis and applied evenly, without interest, over a period of at least six months after the end of the suspension period.

* “Actual costs” do not include the lessor’s overhead or general business expenses, repayment of debt, or payment of interest on the lessor’s loans

* All notice and cure periods are suspended and extended for the length of the suspension period

* Any lease that terminates during or within sixty days after the suspension period shall be extended until sixty days after the end of the suspension period. During the suspension period, no rent shall accrue, only actual costs as outlined above. After the suspension period, rent may accrue.

* Failures to pay during or within sixty days after the end of the suspension period may not be reported to credit agencies

B. Car Leases [and also possibly Business Equipment Leases]

* Stay of all collection or enforcement proceedings, including acts to regain possession with or without the legal process; initiation of new actions; and continuation of existing legal proceedings.

* This stay shall not apply to legal proceedings necessary to prevent waste or damage.

* Proceedings under this exception shall be limited to steps necessary to prevent such waste or damage.

* Failure to pay during and up to thirty days after suspension period shall not be a default or trigger any penalties or increases in penalties

* Rent or other regular payments or fees shall not accrue during suspension period

* However, actual costs incurred by lessor during the suspension period may accrue during the suspension period. At the end of the suspension period, such costs may be allocated on a per-unit basis and applied evenly, without interest, over a period of at least six months after the end of the suspension period.

* “Actual costs” do not include the lessor’s overhead or general business expenses, repayment of debt, or payment of interest on the lessor’s loans.

* All notice and cure periods are suspended and extended for the length of the suspension period

* Any lease that terminates during or within sixty days after the suspension period shall be extended until sixty days after the end of the suspension period. During the suspension period, no rent shall accrue, only actual costs as outlined above. After the suspension period, rent may accrue.

* Failures to pay during or within sixty days after the end of the suspension period may not be reported to credit agencies

III. Insurance premiums

* Stay of all cancellations until sixty days after termination of suspension period.

* Stay of all collection or enforcement proceedings, including repossession of property pledged under prior agreements; initiation of new legal proceedings; and continuation of existing legal proceedings.

* Failure to pay during and up to sixty days after suspension period shall not be a default or trigger any penalties or increases in penalties

* Interest or time-dependent fees shall not accrue during suspension period

* All notice and cure periods are suspended and extended for the length of the suspension period

* Failures to pay during or within sixty days after the end of the suspension period may not be reported to credit agencies

IV. Utilities

* Shall continue to provide service, to at least the level of service provided prior to the suspension period. Stay of all shutoffs until sixty days after termination of suspension period.

* Stay of all collection or enforcement proceedings, including initiation of new legal proceedings and continuation of existing legal proceedings.

* Failure to pay during and up to sixty days after suspension period shall not be a default or trigger any penalties or increases in penalties

* Interest or time-dependent fees shall not accrue during suspension period

* All notice and cure periods are suspended and extended for the length of the suspension period

* Failures to pay during or within sixty days after the end of the suspension period may not be reported to credit agencies

[A_B]

A gofundme to help you pay your mortgage might b easier, Steve.

Didn't Italy just do this countrywide?

[brian]

Unite
To
Assist and
Help Act

[Steve of phpBB]

Didn't Italy just do this countrywide?

I know Italy suspended mortgages. That's where the idea came from.

[HaulCitgo]

First thing that jumps to my mind based on bk code is what would be the way for creditors to avoid loss of value of collateral and when could they (and what procedure) to get ok to foreclose/repo. To me this is just shifting the problem from debtors to creditors. Those creditors have financing arrangements too. Those creditors, lessors, utility providers are major employers so if they don't get paid they cut costs so then folks can't pay after the suspension period because they have no job. Not a bad idea but the bk laws are already there. Just use them.

[Steve of phpBB]

First thing that jumps to my mind based on bk code is what would be the way for creditors to avoid loss of value of collateral and when could they (and what procedure) to get ok to foreclose/repo. To me this is just shifting the problem from debtors to creditors. Those creditors have financing arrangements too. Those creditors, lessors, utility providers are major employers so if they don't get paid they cut costs so then folks can't pay after the suspension period because they have no job. Not a bad idea but the bk laws are already there. Just use them.

Thanks.

Yeah, I think the utilities part is a problem. Under Section I, all commercial loans would be covered as well as consumer loans. I figure that once you get high enough up the economic food chain, folks are are capable of making their own workout arrangements that your basic tenant or car buyer can't. So I'm not paying my landlord, but it's okay because my landlord doesn't have to pay his or her ongoing debts right now either. And the landlord's creditors don't have to pay theirs either. (I didn't copy this part into my post, but this whole thing is only supposed to last a maximum of four months If the legislature were to extend it, they'd have a chance to address unforeseen consequences.)

But as you point out, utilities have to pay a lot of workers. States regulate a lot of utilities pretty heavily, but I don't know if they are required to have sufficient capital to cover six months of employee wages with no money coming in.

For landlords, I figure that "actual costs" are a small part of their operation, so they could ride it out or get financing to cover them. Their biggest costs are normally debt service and property insurance, which are suspended. Large-scale commercial or residential property lessors may have to take it on the chin, but I think they can afford it for a few months.

I don't think it'd be a good idea to require thousands of regular people to file bankruptcy, especially since that requires lawyers, certain certifications about consumer education or whatever, and preparation of schedules and statements. The idea is to automatically put everyone into a no-fault bankruptcy for a few months.

But I do like the idea of a motion to lift stay to protect collateral that is in danger of losing its value and would not be critical to the person going forward. I'l see what I can copy from the Bankruptcy Code.