Thousands of New Yorkers have lost their jobs in the last several weeks because their employers ceased operations to control the spread of COVID-19. Those who rent their homes or have a mortgage are understandably worried. What happens if you can’t pay?

On March 20, Governor Cuomo issued an executive order that prohibited enforcement of the following for 90 days:

  • Eviction of any residential or commercial tenant
  • Foreclosure of any residential or commercial mortgage

It was followed on May 7 by Executive Order 202.28, which extended the moratorium on evictions and foreclosures until August 20, provided that the tenant or homeowner was facing financial hardship due to the pandemic and eligible for federal or state unemployment benefits. This second order allowed people to present financial hardship as a defense to an eviction or foreclosure proceeding. In any event, neither proceeding can be initiated against you until the state courts reopen and allow new actions to commence.

Evictions

On March 15, Chief Administrative Judge Lawrence K. Marks issued a memorandum suspending all eviction proceedings “until further notice.” At present, the New York City Council is also reviewing a bill that would halt evictions for nonpayment of rent until April 2021.

At any rate, if you are a renter, your landlord can’t pursue you for unpaid rent through the housing court during the moratorium, although they can try to collect it in civil court. If you lose your case, you won’t be evicted, but you will have to pay a rent settlement. If your landlord is amenable to a payment plan, you can try to negotiate an arrangement, so you aren’t deep in arrears when you start working again.

Foreclosures

Executive Order 202.9, issued on March 21, directed the New York State Department of Financial Services to ensure that regulated or licensed entities provide New York property owners with a reasonable opportunity to have a forbearance of their mortgage payments when they encounter financial problems due to COVID-19.

On March 24, the DFS issued a regulation that provided emergency relief to New Yorkers who were unable to pay their residential mortgage as a result of the pandemic. It does not apply to commercial mortgages or other loans.

Although these measures can protect you from losing your home, you could still face a lot of housing-related debt once the crisis passes. Once you are working again, you may be able to address these arrears over time, but if the debt is too high, bankruptcy may be an option. A consultation with a New York bankruptcy attorney can help you decide whether Chapter 7 can help you put the worst of the pandemic’s financial effects behind you and let you move toward a brighter future.

Jayson Lutzky is a Bronx bankruptcy lawyer with over 37 years of legal experience. He offers free initial consultations. If you have questions, then call 718-329-9500 to set up an appointment.