If you are struggling financially as a result of losing your job or being forced to close your business during the novel coronavirus (COVID-19) pandemic, you are not alone. Millions of Americans have filed for unemployment; and, even among those who are eligible, unemployment benefits often are not enough.
Is filing for bankruptcy an option? If so, is it the right option for you? In order to decide, it will be important to dispel some common myths about bankruptcy and examine some of the alternatives that you may have available.
Many People File for Bankruptcy Each Year
Even under normal circumstances, the bankruptcy rate in America is high—and with good reason. While there is a common perception that filing for bankruptcy means that you have somehow failed, the reality is that the bankruptcy process is designed to offer a fresh start to individuals under a broad range of circumstances. With the COVID-19 crisis keeping workers at home and shuttering businesses, we expect that many more people will be filing for bankruptcy as a result of the crisis.
The federal government does too. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act that President Trump signed into law on March 27, 2020, there are new rules that make bankruptcy an option for many more small business owners. Among them, the CARES Act temporarily increases the debt threshold for Chapter 11 eligibility from approximately $2.7 million to $7.5 million. The CARES Act also allows individuals who have previously filed for bankruptcy under Chapter 13 to extend their payment plans (and therefore reduce their monthly payments) if they have suffered a “material financial hardship” as a result of the COVID-19 crisis, and it clarifies that stimulus payments will not count toward individuals’ income for bankruptcy purposes.
There are Alternatives Available, Including Alternatives that are Specific to the COVID-19 Crisis
While filing for bankruptcy will be a good option for many people, before you decide to file, it is important to also consider any alternatives you may have available. For example, in many cases individuals and couples will be able to settle or refinance individual debts in order to reduce their monthly financial obligations without going through the bankruptcy process. Additionally, the CARES Act affords mortgage relief to homeowners with federally-backed loans; and, according to the New Jersey Department of Banking & Insurance, several private mortgage lenders are offering relief to New Jersey homeowners as well.
Ultimately, you need to choose the option that provides you with the most financial stability and flexibility possible. For more information, schedule a confidential initial consultation with a New Jersey bankruptcy lawyer at Helmer, Conley & Kasselman, P.A. today.
Discuss Your Options with a New Jersey Bankruptcy Lawyer in Confidence
Do you have questions about filing for bankruptcy during the COVID-19 crisis? If so, we encourage you to get in touch. To speak with one of our experienced New Jersey bankruptcy attorneys in confidence, call 877-435-6371 or request an appointment online now.
