What to Know About Filing for Bankruptcy During a Pandemic

What to Know About Filing for Bankruptcy During a Pandemic

31 March 2021
 Categories: , Blog

Have you considered filing for bankruptcy but have some reservations about it due to the current pandemic? Discover some things that you should know about how the state of the world could impact a bankruptcy filing.

Determine If You Have a Long-Term Financial Problem

First, take a deep look at your current financial problem. Is it something that will affect you long-term? Or if it is only a short-term problem that you are dealing with due to the pandemic? For example, if you are currently out of work due to working in the service industry, you may have fallen behind on your bills and are struggling. But do you see yourself having a positive cash flow during the next six months to a year when things start to return to normal? If so, then you might want to hold off on bankruptcy.

On the other hand, if there are circumstances beyond the pandemic that have caused you to fall on hard times and you won't get back the cash flow that you need, then definitely consider bankruptcy. For example, you may have a permanent injury that has made you unable to go back to work or have so much debt that even returning to work will not get you out of it.

Consider If You Qualify Due To Means Testing

If you've been out of work for several months, it may make you more likely to qualify due to means testing. That is because means testing looks back at the past several months of income. Being out of work due to the pandemic can make that means testing appears more in your favor. Things like the recent stimulus checks will not be considered as income as well, since they are technically a tax refund. They won't impact your means testing in a negative way that would prevent bankruptcy from being possible.

Look Into If the Automatic Stay Will Help You 

Filing an automatic stay means that creditors won't bother you for the money you owe, and any eviction or foreclosure on your home will stop. However, it is worth looking into what is happening in your state that may already protect you. For example, if there is a moratorium on evictions and foreclosures, then you may not need that automatic stay to protect your home. If there is no protection and you are at risk of losing your home, then bankruptcy and the automatic stay can buy you some more time.

To learn more about if bankruptcy is right for you during the pandemic, speak to lawyers like C. Taylor Crockett, P.C.

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When you have a large amount of debt and no way to pay it, you can start to feel like your freedom has been ripped away from you. With every debt collector that calls and every bill that comes in the mail, you feel more and more uneasy. Thankfully, there is a way forward. You can call a bankruptcy attorney and find out if declaring bankruptcy is an option. This will depend on your income, total debt, and what type of debt you have. Here on this website, you can learn more about the work of bankruptcy attorneys and how to proceed.