Amid the current economic turmoil, there is a way to help them immediately: a national debt collection moratorium, according to a commentary by Profs. Adam Levitin of Georgetown University Law and Prof Satyam Khanna of the N.Y.U. School of Law. The single best thing Congress can do to stanch economic bleeding is to enact as stand-alone legislation a national moratorium on collections against small businesses, according to Levitin and Khanna. Small businesses are already laying off employees in response to the drop in demand because of the coronavirus. These layoffs risk sending the economy into a downward spiral of decreased demand, defaults and further layoffs within weeks or even days. To limit the damage, small businesses need help now. Many of the stimulus programs being considered by Congress are important and necessary. However, it could be months before these lifelines reach businesses. It will take Congress time to finalize the terms of any rescue package. Then, it will take time to build the administrative infrastructure for any new federal loan or reimbursement program, and even more time to process loan applications or reimbursement claims. The moratorium proposed by Levitin and Khanna would include a freeze on foreclosures, evictions, repossessions, utility disconnects, garnishments, default judgments and concessions of judgments, administrative offsets and negative credit reporting. According to a recent survey by the Federal Reserve banks, 70 percent of small employers have outstanding debt. The only way businesses can maintain employment is if they have some cushion against these coming obligations, according to the commentary.
