The outbreak of COVID-19 is causing financial difficulties for many people. Money isn’t coming in, but the bills continue to show up at regular intervals. It’s hard to ask for forbearance because the phone lines are jammed with an hours long wait. In addition, some creditors are unwilling to offer any kind of relief at the moment. Bankruptcy may be an option for some people, but now stimulus payments are going out and there’s the confusion about the impacts of the CARES Act on bankruptcy.
First, it’s important to explain the two options for consumer bankruptcy. The United States Bankruptcy Code contains Chapter 7 and Chapter 13 for individuals facing economic difficulties. Chapter 7 is a process that erases all of your qualifying debts, and allows you to immediately start over with a clean slate. The record of a Chapter 7 filing remains in your credit file for seven years. Chapter 13 is used if you have enough assets and earnings to pay back a certain percentage of their debt over a period of years. Chapter 13 filing also remains on your credit record for seven years. Both types of bankruptcy petitions have to be approved by the court. However, once the petition is filed, creditors can no longer harass you by phone or mail.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress, and signed into Law by President Trump on March 27 does affect Chapter 7 or Chapter 13 bankruptcy filings. The CARES Act has provisions that allow the stimulus payments not to be considered in either type of consumer bankruptcy. In addition, it also allows Chapter 13 debtors with confirmed payment plans to modify them based on financial hardship caused by the COVID-19 pandemic. This provision also applies to all bankruptcies filed in the last year. It is, however, important to understand that the COVID-19 pandemic situation is constantly changing, and there may be further legislation that changes or adds to the impacts of the CARES Act on bankruptcy.
Bankruptcy may not be the right path for you. Our staff are experts in the field of bankruptcy, but we also specialize in debt counseling. Many times creditors are more willing to negotiate with an attorney. It may be possible to lower or eliminate interest, waive late fees, and stop late payment being reported to the credit bureaus. You may also qualify for a loan that allows your credit debts to be paid off and offers you a more affordable monthly payment. This type of loan is generally paid off over a period of years, and will have you free of debt much faster than a monthly minimum credit card payment.
We specialize in helping people in financial difficulty and our attorneys are ready to look at your situation with an eye toward the best solution for you. Bankruptcy is not the solution for everyone, but when the circumstances lead to it, the United States Bankruptcy Code offers solutions to relieve overwhelming financial burdens. We also want to keep our clients solvent and work toward helping our clients maintain good credit. Together we can get your finances back on track.
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The Law Office of Barbara B. Braziel helps people get out of debt. We offer free consultations to people of Savannah, GA and the surrounding areas, including Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Ludowici, Springfield, Pembroke, Brooklet, and Garden City.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.