DEBT CONSOLIDATION AND BANKRUPTCY DURING COVID-19
The number of Americans out of work due to the pandemic is record-breaking and the number could continue to grow exponentially. Out-of-work Americans worry about their ability to pay rent and other bills, as well as buy essentials such as groceries. With bills piling up, many may wonder if declaring bankruptcy is the answer. However, immediately jumping into bankruptcy to wipe out your debts may not be the answer. Obviously filing for bankruptcy is one available option, but very often, it should be your last option. The danger of immediately jumping into bankruptcy is that you may incur more debt over the next few months until this pandemic is over and the economy can finally begin to heal. If that happens, and you’ve already filed, then you will be left without that bankruptcy option to wipe out newly incurred debt. If you file a Chapter 7 bankruptcy and receive a discharge of your debt, you can’t file again for eight years. If you file for Chapter 13, you’ll need to wait six years before you can file for Chapter 7 bankruptcy. If you want to re-file for Chapter 13 bankruptcy again, the waiting period is two years.
First, get a handle on all of your debt and all of your income. See whether your current income level permits you to pay the minimum amount due on all of your bills so that you can remain current. If your circumstances change for the better in the near future, then you can adjust your payments and hopefully pay a bit more than the minimum amount due on your bills.
Second, if your circumstances are such that it is impossible to pay the minimum amounts due on all of your bills, then it’s time to try to negotiate settlements with as many creditors as possible. During these times, creditors are willing to negotiate to settle debts for cents on the dollar in order to, avoid legal fees and expenses necessary to pursue you in litigation and, to get some money today as opposed to years from today. This option is especially valuable to debtors today in an atmosphere where the courts are a bit more sympathetic to those suffering financially because of COVID-19. The CARES Relief package blocks lenders from starting foreclosure proceedings on federally backed loans and gives homeowners experiencing financial hardships the option to request up to 180 days of forbearance on their mortgage. Furthermore, many banks are offering to defer credit card, auto loan, and student debt payments.
While it’s possible for you to do all of this on your own, it may be better to work with someone who has more experience with debt consolidation issues. Law Office of Anthony Agrippina, PC can review all of your debt with you and start working with your creditors to settle your debt for cents on the dollar and/or consolidate your debt to make it more manageable during these financially difficult times.
Your final option is to file for bankruptcy. There are generally two types that individuals file: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is all about selling anything valuable you own to pay off your debts. Generally, this type of bankruptcy wipes out all of your outstanding debts once a judge approves your filing in court. The process generally takes about four – seven months. Chapter 7 bankruptcies are best for those who are unable to pay back all, or a significant portion, of their balances on, for example, credit card debt.
A Chapter 13 bankruptcy, is commonly referred to as a reorganization bankruptcy. A Chapter 13 filing is better suited for those individuals who still have a steady income which allows them to be able to create a court-approved consolidated payment plan to repay their debt in installments over a period of generally three to five years. In a Chapter 13 bankruptcy, you generally don’t have to sell off any property to pay your creditors. At the end of the court-approved consolidated payment plan period, any remaining unpaid debt is discharged.
Contact the Law Office of Anthony Agrippina, PC to discuss your particular situation and what options are not only available to you but may be best for you now in order to deal with rising debt during these difficult and unusual times.
