COVID-19, the new coronavirus, is affecting every aspect of our lives. For many, the pandemic has been especially burdensome financially. People across the country want to know what the short- and long-term ramifications of the virus will be on their bank accounts. Many are concerned COVID-19 could drive people into bankruptcy or affect the current situation of those who already filed for bankruptcy.
1. Those who recently filed for bankruptcy and have a case pending will likely find the progression of their case slowed because of COVID-19. 341 Meetings have been delayed because of the disruption to the courts and most meetings won’t be held over the phone or via other means.
2. Chapter 13 confirmation hearings and hearings on miscellaneous chapter 13 matters, on the other hand, are still being held as scheduled and will take place via telephone.
3. Your discharge might be postponed because of the delay in the 341 meeting. Your attorney or trustee can provide further information or you’ll be notified by the court by mail about any updates.
Despite the delays, you should remain aware of all deadlines associated with your case, including when filing fees and paperwork are due. Due dates for submitting proof of bankruptcy education and other deadlines haven’t changed. Missing them could delay your case further. You must continue to meet all of your bankruptcy obligations during the delay.
The court will notify creditors of any delays or other issues that affect them.
The CARES Act relief package passed by Congress resulted in a few changes to bankruptcy law that affect those who are filing or who have already filed. For example:
4. The federal government is issuing some Americans relief payments during this crisis. These payments may not have to be turned over to bankruptcy trustees.
5. Relief payments will not affect the determination of your income when you file for Chapter 7 or Chapter 13 or when calculating your Chapter 13 payments. Chapter 13 filers have the option of modifying their plans based on hardship caused by COVID-19.
6. Anyone obligated to make Chapter 13 payments should continue to do so if possible. You should also make any other payment obligations under your plan including your mortgage, again, if possible.
Many people were in the process of deciding to file for bankruptcy when the COVID-19 crisis occurred. Others are considering it now because of how the virus has affected their financial situation.
7. Filing for bankruptcy at the moment is still possible. Bankruptcy courts remain open, though all business is conducted over the phone. New cases might not move along as quickly as they would under other circumstances, but filing for bankruptcy right now can still offer relief.
8. One of the most beneficial aspects of bankruptcy – the automatic stay – still goes into effect when file. This means you’ll no longer need to deal with calls from creditors and bill collectors amid the pandemic.
9. If you are wondering if you should wait for your stimulus before filing or if relief payments will be enough to prevent bankruptcy, the answer varies on a case-by-case basis. Some people will choose to use their relief payment for the fees associated with filing, while others will delay their decision to file with the newly implemented support from the government.
To learn more about the CARES Act relief package, refer to this information from NPR.
Determining what is right for you is a personal decision and can be guided with assistance from a financial professional.
Filing for bankruptcy can be a difficult decision, but the current circumstances have forced many people to consider it an option.
If you aren’t sure what comes next or you have questions about the impact of COVID-19 on bankruptcy, we can help. Our firm is open and running and prepared to help you with unexpected financial hardships. In an effort to protect everyone’s health, we are available by phone or video on your smartphone. The bankruptcy court is open and we can protect you immediately from any creditor action. For more information, contact the bankruptcy Law Office of Robert M. Geller at 813-254-5696.
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