Although COVID-19 has introduced a lot of uncertainty into our economy and society, creditors still want to be paid – and for the millions of Americans who struggle with consumer debt, bankruptcy may seem like a viable option after a coronavirus-related job loss. In some cases, you may have already been considering filing for bankruptcy before the COVID-19 crisis and are now wondering if this could still be a viable solution.
As trusted bankruptcy attorneys, our team at Pearson Butler can help walk you through all the options when you’re dealing with mounting debt. In this post, we’ll review a few considerations you should keep in mind as you decide whether to file for bankruptcy.
When Should I File for Bankruptcy?
Largely, filing for bankruptcy will depend on your job status. If you are not getting paid and are not sure when you will be getting paid next, it’s a good idea to hold off on bankruptcy for as long as you can. Because there is much uncertainty right now, there may be more debt that you need to incur to make it through the crisis.
However, if you are still getting paid and think you will continue to get paid, then now would be an okay time to file. If you are going to get stimulus money, wait until that is spent to file. However, if you are being garnished or your car is going to be repossessed, then you may not have the privilege of deciding when to file and you may just need to file now.
Types of Bankruptcy
There are two consumer chapters of bankruptcy – Chapter 7 and Chapter 13. Chapter 7 has an income cap based on the size of your family. It will not help you save a vehicle or a house if you are behind on payments. It will get rid of (discharge) medical bills, credit card debt, personal loans (unsecured), payday loans and other consumer debt. It will not get rid of the following: Most taxes, child support, alimony, student loans and criminal fines or restitution.
Chapter 13 bankruptcy is where you are making monthly payments. If you are above the income cap, then it is your only option. In a Chapter 13 case, you are paying back a portion of your debt over three to five years. Chapter 13 can help you save a car or house that you are behind on.
Where Do I Go from Here?
While you may not be sure whether bankruptcy is a good option for you at this time – or which type of bankruptcy to file for – the good news is that our team here at Pearson Butler can meet with you over the phone to look at your specific situation. When you call for a consultation, our receptionist will help to set you up for a phone conference, and we will ensure that you get the quality counsel on bankruptcy matters that you deserve. It’s our mission to help people during these difficult times, and we look forward to providing that service for you when necessary.
Call (800) 265-2314 or contact us online to get started with a consultation.