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Filing for Bankruptcy During Coronavirus

websitebuilder@thryv.com — Wed, 20 May 2020 07:45:07 GMT

Filing for Bankruptcy During Coronavirus

The coronavirus pandemic has devastated the United States economy. The most recent data from the Labor Department indicates that 22 million workers have filed for unemployment benefits. The stark reality is bleaker. This number fails to account for those who are either underemployed or gig workers who have lost their jobs. In an economy that has previously been praised for its record shattering employment statistics, the most basic necessities—food, shelter and medical care—are at risk. Many people feel as if they are drowning with no hope of being saved. One viable option is filing for personal bankruptcy.

Our society stigmatizes bankruptcy. Whether it be the disdain of friends and family or the difficulty of obtaining future credit, many people hold off filing for bankruptcy when it can be the best alternative. Experts anticipate a significant increase in the filing of personal bankruptcies in May and June of this year. If you are one of the millions of Americans falling deeper into debt, filing for bankruptcy may be your best option. Chapter 7 and chapter 13 bankruptcies are the most common programs utilized to reduce or eliminate debt. Chapter 13 is referred to as “reorganization bankruptcy” and involves the creation of a court-mandated repayment plan. A chapter 13 bankruptcy may enable you to keep some of your assets and, after you complete the repayment plan, have debts discharged. This article will discuss the more common type of bankruptcy that people will file—Chapter 7.

A chapter 7 bankruptcy , also known as a liquidation bankruptcy, involves selling anything valuable--including a vacation home, a second vehicle, collectibles, stocks and bonds—in order to repay your debts. In general, this bankruptcy eliminates the majority of debt once a judge approves your filing. It is important to note that it does not discharge all debt. Domestic support arrearages, newly acquired tax debt and student loan balances are some examples of what cannot be eliminated. Luxury items, such as a vacation home, expensive jewelry or a valuable coin collection must be sold.

Filing for Chapter 7 bankruptcy does provide substantial benefits. You will retain the property where you work and live, which is the primary concern for most people. The entire process generally involves 3-5 months and is best suited for individuals who cannot repay all, or even a substantial portion, of their balances. Should you have an unmanageable amount of unsecured debt such as medical expenses or credit card purchases, Chapter 7 may prove to be the optimum option. The sooner you file, the quicker you will be able to reinstate your credit.

In order to qualify for a Chapter 7 bankruptcy, you must take the “ means” test . To qualify under the means test, your income must be at, or below, the median income for your state. Two exceptions exist:

If most of your debts are business-related, you will be exempt from the means test.
If your gross income is too high, you may qualify using the second portion of the means test, which allows you to deduct certain expenses.

A majority of the population is currently overwhelmed. People struggle to obey the “stay at home” orders, homeschool children, attend to younger children, manage their households and

grapple with ever-mounting debt. People who remain working at a physical location, are required to take additional health and safety measures. Employees working at home deal with the challenges of working in a remote environment. Filing for chapter 7 bankruptcy offers some of the following benefits:

Debt forgiveness: Through a Chapter 7 bankruptcy, you can repay creditors quickly or discharge the majority of your debt. You can eliminate debts like credit card balances, personal loans and other forms of unsecured credit.

Relief from creditor harassment: When you file for bankruptcy, the judge implements an automatic stay on creditors, which prevents them from contacting you or repossessing your property.

Home and personal property exemptions: Filing for Chapter 7 doesn’t require you to sell all of your possessions. You may be able to retain your home and certain household goods.
Assistance with your home: If you are facing foreclosure, Chapter 7 will not erase the debt, but it may provide the time needed to restructure your finances.

Despite the fact that many Americans feel desperate and fearful, correct decisions involve knowledge and an understanding of all options. Filing for personal bankruptcy may be the optimum route. Should you be facing increased debt and/or decreased income, speak with a knowledgeable bankruptcy attorney. For a free consultation, contact Ms. Haven Del Pino of the Del Pino Law Firm at (305) 362-6277 .

COVID-19 EFFECTS & BANKRUPTCY

websitebuilder@thryv.com — Sun, 19 Apr 2020 07:36:31 GMT

COVID-19 EFFECTS & BANKRUPTCY

An additional 4.4 million Americans filed for unemployment last week. Over 16 percent of the labor force is currently unemployed. Some economists have cautioned that the so-called “Great Lockdown” will push the global economy into the worst recession since the Great Depression, when unemployment spiked to 25%. The unemployed worry about their ability to pay rent, groceries and all their bills. Approximately 58% of Americans claim that they have lost income due to the coronavirus, according to Transunion’s online poll of over 3,000 adults. Of those polled, nearly seven out of ten are worried about paying their bills and making good on loans.

Bankruptcy is a legal process available to consumers and businesses who are unable to pay their debt and who must find a way to pay at least a portion of their obligations. Consumer bankruptcies can take two forms: chapter 7 and chapter 13. A Chapter 7 bankruptcy liquidates a person’s “non- protected” assets into money earmarked to pay creditors. In other words, a Chapter 7 bankruptcy involves selling all “unprotected assets” that you own: a second vehicle, collectibles, stocks, a vacation home, etc. After a judge approves your filing in court, your debts are eradicated. Chapter 7 bankruptcies are best suited for (i) individuals who cannot repay all, or a substantial portion of, their debts or (ii) individuals who have an unmanageable amount of unsecured debt, such as a credit card. In contrast, a Chapter 13 bankruptcy (also known as a “reorganization bankruptcy”) is designed for those with a steady income who can pay all, or part of, their debts in installments. You generally don’t sell your property to pay off creditors in a Chapter 13 bankruptcy. The task becomes to make monthly payments to a Chapter 13 trustee with a plan that lasts 36 to 60 months. When the repayment plan is completed, you will receive a discharge order that wipes out the remainder of qualifying debt.

With the mounting pressures today, many people erroneously assume that bankruptcy is their only alternative. To the contrary, in several cases people can avoid filing for bankruptcy. President Trump signed a $2.2 trillion stimulus bill that offers forgivable loans to small businesses and $1,200 direct checks for people making up to $75,000 and $2,400 for couples earning under $150,000. In addition, the Coronavirus Aid, Relief and Economic Security Act (CARES) also made substantial changes to the Bankruptcy Code. They include:

The direct checks (also known as “rebates”) do not count as income and, as a result, would not get factored into a “means test” that determines if someone can file a Chapter 7;
The recovery rebates do not count as “disposable Income” that could be applied to things like credit card debts in Chapter 13;
People who are already in Chapter 13 repayment plans and are experiencing financial hardship due to COVID-19 have a one-year window to change repayment terms. The timeframe may be further extended for up to two years.

Proponents of the CARES Act point out that Trump’s changes are “really positive” insofar as they help consumers in debt access Chapter 7’s bankruptcy protections while also allowing them to use their recovery rebates. In addition, the stimulus provisions allow people in Chapter 13 plans to use their direct checks and gain additional time on plans that normally must conclude within 5 years (plans now have 7 years).

Bankruptcy attorneys generally advise their clients to consider all the factors before filing for bankruptcy. Whenever someone is facing a situation where his or her debt is spiraling out of control there are basically 3 options:

Pay the minimum on all your bills, stay current and tough it out as long as you can and hope it goes your way.
Negotiate a settlement with your lenders.
File for bankruptcy.

In most cases, bankruptcy should be the last resort . The focus should be on working with your bank and loan servicers to procure immediate assistance in order to decrease or to defer your payments. You may retrieve your previous standing without filing for bankruptcy. Many banks, lawmakers and regulators are rolling out assistance programs. For instance, the $2 trillion Congressional relief package not only prevents lenders from foreclosing on federally backed loans, but also gives homeowners experiencing financial hardships the option to request up to 180 days of forbearance on their mortgage. In addition, many of the largest banks and credit unions have created hardship programs, offering to defer credit card, auto loan and student debt payments until borrowers can regain their equilibrium. The key is to be proactive and explore your options in terms of deferring or restructuring payments.

Once the forbearance and deferment programs end, you will need to pay your bills. In addition, your lender may require that you pay all of your missed payments at one time. If you are still struggling at that point, you should consider asking your lender for longer-term relief such as lowering the interest rates or monthly payment amounts due on your mortgage, auto loans or credit cards. If you are struggling to meet the obligations on your mortgage, you can apply for a loan modification that reworks the terms of your mortgage. In the case of credit card debt, you can negotiate a debt management plan or settlement to consolidate all of your outstanding debt into a single monthly payment that you pay off over the course of three years.

The vast majority of our country has felt the adverse economic impact of COVID-19. Do not panic or act rashly. Proceed methodically and with a complete understanding of your options. If you are considering filing for bankruptcy, it is highly advisable to obtain the guidance of an experienced attorney. For a free consultation, contact Haven Del Pino at Del Pino Law Firm at (305) 362-6277 .

brxn7312-zy7ikkk3axs1slgn-v2

Filing for Bankruptcy During Coronavirus

Filing for Bankruptcy During Coronavirus ﻿

COVID-19 EFFECTS & BANKRUPTCY

COVID-19 EFFECTS & BANKRUPTCY ﻿

Filing for Bankruptcy During Coronavirus

COVID-19 EFFECTS & BANKRUPTCY