Consumers who are facing financial difficulties due to the COVID-19 pandemic might consider bankruptcy as an effective strategy. When filing bankruptcy, the consumer gets assistance through the court to either sell assets are obtain a more structured payment plan. Reviewing what to do if you need to declare bankruptcy helps consumers during these trying times.
Starting a Claim
Starting a claim for bankruptcy requires consumers to complete bankruptcy forms and submit them to the court. However, an attorney can help the consumer review their case before submitting anything to the court and determine if the consumer qualifies for their preferred chapter of bankruptcy. With changes in 2020, some courts might waive the filing fees for bankruptcy if the claimant’s income is below a specific median. Claimants who need assistance in declaring bankruptcy can contact an attorney for more answers.
Gather Income Statements and Information About Assets
Gathering income statements and information about assets helps the court determine if the claimant passes the means test. For chapter 13, the claimant must have an income that is greater than the median for their household size. For chapter 7, the claimant doesn’t have enough income to pay off their debts, but they have enough assets to sell to settle their debts instead. If the consumer passes the test for both chapters, the claimant can choose either chapter they want moving forward with their case.
Evaluate All Chapters and Weigh the Pros and Cons
Evaluating all chapters and weighing the pros and cons helps the consumer get a clear picture of what to expect. The new changes in bankruptcy laws due to the current pandemic now allows claimants to stretch a chapter 13 case up to seven years instead of limiting them to five. Filing for chapter 13 requires the claimant to enter into a repayment plan approved by the court. For chapter 7, the consumer’s assets are liquidated. Unfortunately, the consumer doesn’t get the choose what assets are sold. Both chapters offer an automatic stay that prevents creditors from filing a lawsuit against the consumer.
Attend All Meetings With Attorneys or the Court
Attending all meetings with the attorneys or the court prevents issues for the claimants. With some limitations and restrictions, some meetings will be held via phone or online. The measures are taken to lower the risk of exposure to the COVID-19 virus and enable claimants to get legal help without increasing their risk of the risk of court workers.
Complete Every Step Outlined in Your Bankruptcy Plan
Completing every step as outlined in the bankruptcy plan prevents an early discharge from the court. If the court discharges the bankruptcy earlier, the consumer is immediately responsible for all debts including dents the court eliminated in the bankruptcy claim. It is recommended that the consumer follow every stipulation according to the chapter for which they applied to prevent the early discharge. After an early discharge, creditors can file a lawsuit against the claimant to collect overdue balances.
Consumers filing for bankruptcy to protect certain assets, such as their primary home. The cases issue an automatic stay that prevents foreclosure and lawsuits against the consumer. Filing for bankruptcy requires the consumers to provide records of their earnings and their current assets. Reviewing steps for starting a bankruptcy claim helps the claimants review their options and legal rights at this time.