Should you file a personal bankruptcy – either Chapter 7 or Chapter 13 – while the economy continues to be suppressed due to the coronavirus pandemic?
As I discuss in this video, I am advising potential clients who call me about bankruptcy to move very slowly and to learn as much as they can about both the short term and long term implications of bankruptcy.
In many situations, the best course of action is to do nothing. As long as collection actions, foreclosures and repossessions are limited by law or by court closures, an argument can be made that doing nothing is appropriate. You do not want to file bankruptcy now, only to find that your financial situation takes a turn for the worse in six months and you no longer have the bankruptcy option.
I am especially wary of recommending Chapter 13 filings because Chapter 13 assumes steady, regular income and very few of us can be confident with such an assumption.
When we do recommend bankruptcy, we often look at Chapter 7 as a tool to eliminate both debt and stress. One of the consequences of prolonged lockdown is depression and anxiety and a legal remedy like Chapter 7 that can wipe out debt and allow you to surrender assets like a house or a car that you cannot afford can do wonders for your state of mind.
If you are facing a financial crisis or if you see potential problems in your near future, please call Susan Blum or me at 770-393-4985. We’d be happy to offer our advice about both bankruptcy and non-bankruptcy options.
As the pandemic stretches into its second year, I am still advising potential clients who call me about bankruptcy to move very slowly and to learn as much as they can about both the short term and long term implications of bankruptcy.
In many situations, the best course of action is to do nothing. As long as collection actions, foreclosures and repossessions are limited by law or by court closures, an argument can be made that doing nothing is appropriate. You do not want to file bankruptcy now, only to find that your financial situation takes a turn for the worse in six months and you no longer have the bankruptcy option.
I am especially wary of recommending Chapter 13 filings because Chapter 13 assumes steady, regular income over five years and very few of us can be confident with such an assumption. Several of the Chapter 13 cases I filed in 2019 have failed or are now failing because of salary reductions or job layoffs.
When we do recommend bankruptcy, we often look at Chapter 7 as a tool to eliminate both debt and stress. One of the consequences of prolonged lockdown is depression and anxiety and a legal remedy like Chapter 7 that can wipe out debt and allow you to surrender assets like a house or a car that you cannot afford can do wonders for your state of mind.
Chapter 7 is also more attractive because we no longer have the problem of dealing with a 6 month income lookback for the median income part of the means test analysis. If you have been out of work or working at a reduced pay scale for more than 6 months, your option to file Chapter 7 has likely increased.
If you are facing a financial crisis or if you see potential problems in your near future, please call Susan Blum or me at 770-393-4985. We’d be happy to offer our advice about both bankruptcy and non-bankruptcy options.