COVID-19 and Bankruptcy
We are entering unprecedented times. Businesses are closing, and a big part of our country is staying home to prevent the spread of Covid-19. You are probably feeling very insecure about many things right now, including your finances. You may have been laid off, or your business may be experiencing a major downturn. The service industry is already starting to feel the effects with fewer people heading out for food, entertainment, or travel.
Long-Term Effects
Even when things get back to normal, the devastating effect on our economy will be felt for a long time to come. There are businesses that will not re-open after the crisis is over. Many citizens will have medical bills that will make life that much tighter even if they still have a source of income. Charities and food banks are going to be stretched to their limits, and their ability to feed those who are in tough spots will be severely hampered.
Many of us will miss more payments than just the ones that are due during the time that we are socially distancing. In some cases, months may go by before you can make a payment on your mortgage, car, or debts. The fact is, that sadly isn’t your fault. When the world has turned upside down, your focus should always be on your health and the health of your family and loved ones.
You Might Get Behind
By the time summer is in full swing, you may find yourself 3 or 4 months behind, with seemingly no hope of catching up. You do have recourse, however. Filing for bankruptcy has carried an unfair stigma for a long time, but in reality, it’s a fresh start after a tough period. Filing for Chapter 13 can prevent a foreclosure on your home or business. Filing for Chapter 7 can erase those overdue debts and put you on a clean slate.
Chapter 13
If you make a regular wage, but the cost of everything during the crisis has just overwhelmed you, then Chapter 13 bankruptcy might be the best path for you. If you make enough to eventually pay off your debts, but would have difficulty paying them off immediately as many creditors are requesting, then it offers a chance to negotiate settlements instead. You would have three to five years to resolve your issues, and you can keep your home in the meantime. This will prevent home foreclosures by negotiating something that works for you and keeps the banks off of your back.
Chapter 7
Chapter 7 is what’s known as a complete or liquidation bankruptcy. If you file for Chapter 7, a trustee is appointed to your case. Their job is to sell your assets and use the proceeds to pay off your creditors. Creditors will get as much as possible, but they usually do not recover everything that is owed to them. This is simply because most people filing for Chapter 7 do not have enough value in their assets to pay everyone back. This is because with Chapter 7 there are certain assets that are exempt. You as a debtor can select what is exempt as long as it conforms to federal and state statutes. Your residence can be exempt, as can your vehicle, any business properties, and even your retirement accounts. If you list something as exempt, you can hang on to it, but you will have less to pay back to creditors. This is a good option if you qualify since you would be able to keep your home and not be left on the street.
When recovering from the toll of Covid-19, Americans are going to need something to help them get back on their feet. Bankruptcy might be the perfect antidote for what is ailing your finances. Talking to an experienced bankruptcy attorney will give you the chance to fully understand your options through the advice of an expert. Call the law office of Michael West at (404) 913-1529 to talk about what bankruptcy choices are available to you.