Filing Bankruptcy in the Time of COVID-19
The COVID-19 pandemic has upended a lot of families during the last year. Nearly 350,000 people in the United States have died from COVID-19, and over 20 million people have been infected. The unemployment numbers are staggering as well. If you have reached a point in your financial crisis where you can’t continue to pay your bills during this time, here are some guidelines for filing bankruptcy during COVID-19.
What Is Bankruptcy?
Bankruptcy allows you to discharge your debt. There are two forms of individual bankruptcy, Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, your assets may be sold in order for all of your debts to be discharged, but you won’t owe money after your court date is complete. You can also choose to file for Chapter 13 bankruptcy, which means you, your lawyer, a trustee, and your creditors work out a payment plan for your debts. You usually don’t sell assets, but instead you work to pay off your debt while you are protected from creditors.
Changes During COVID-19
First, you need to know that from the time your lawyer files your paperwork and receives a number for your case, you are protected from creditors. Because of court closures related to COVID-19, you may not have your case heard or meetings for months, but you still have a case.
Also, you need to know that under legislation that passed last March related to COVID-19, called the CARES Act, that has stipulations for the pandemic. First, if you choose to file Chapter 13, you may have extended time to have your payment plan–up to seven years. One of the most important changes to the bankruptcy laws is with stimulus checks. The CARES Act specifies that any stimulus checks you get you are allowed to keep, and your creditors can’t withhold them.
If you have concerns about your personal finances during COVID-19, or you need help deciding whether or not bankruptcy is right for you, you can always talk to an attorney. Bankruptcy attorneys are well-versed in current COVID-19 legislation.