WHEN the virus makes your income disappear overnight, it can be very frightening to realize that you can’t go very long without it because your bills don’t stop just because your income did.
No one ever wants to file bankruptcy. But if you are one of the millions laid off and don’t even know whether you have a job to go back to or not, it might make sense, especially if you are overwhelmed with debt. If bankruptcy is appropriate for your situation, it can give you a sense of control during these uncertain times and help you get back on your feet quickly when things go back to normal.
While the government is doing its best to provide safety nets during this crisis, you are still left to figure out on your own how to survive financially. Your stimulus check may be enough to keep you afloat for a month or two, but once that’s gone, you’re back in the same situation. For small businesses hoping to get a loan from the SBA, the money quickly ran out in a couple of weeks, and there has been no word if they’ll even get any money if Congress decides to provide additional funding.
If you have stopped paying your mortgage due to your lender agreeing to a temporary forbearance, you should realize that this relief is temporary, and that the money will still need to be paid back whether in payments or a lump sum. No such thing as a free lunch.
Same thing applies to suspended rent payments due to the government issuing a moratorium on evictions for the time being. Once the stay at home order is lifted, you should assume that the missed rent will be due and unless you can work something out with your landlord, you can be evicted.
The best thing you can do right now is to develop a financial strategy instead of doing nothing. Some people who call my office tell me that they are not even calling their mortgage company or the lender on their vehicle because they don’t know what to say.
This is the wrong approach. It is always best to maintain communication with creditors who have quicker legal remedies than others. Your mortgage company can foreclose on your home. The lender on your car can repossess. It is important to let them know how the virus has affected your finances and see what type of assistance they can provide even if temporary.
Remember that food and health should be at the top of your priority list. If you are fortunate enough to have a bit of savings, make sure that you only spend this on essentials for daily survival. It would not make sense to waste this money paying a bill that you could wipe out in bankruptcy if you have to file later.
Don’t assume that just because you’re now unemployed or that the fact that your hours have been cut that you will automatically qualify for bankruptcy. The court still looks at your income for the last 6 months and if you’re likely to go back to work soon making the same amount of money, it will be tough trying to convince the court that you have no ability to pay. But if you are uncertain as to when and if you’d even be able to go back to work, you may have a good argument to file bankruptcy now while the timing is right.
Every situation is different and must be analyzed by an experienced bankruptcy attorney.
Obviously, if now is the right time to file bankruptcy, the sooner you do it, the sooner you can rebuild your credit and get back on your feet. If you’ve hit the bottom or about to, you may be feeling a lot of stress right now like everyone. My suggestion is to take things day by day, remember that there is only so much that you can do and to be pro-active in developing a financial strategy instead of just waiting for things to happen.
Call my office and together, we can figure out what the best strategy is for your situation.
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NOTE: Due to the virus lockdown, I am currently offering consultations via phone or video. Please call the office to schedule your appointment with me. Questions? Email me at [email protected].
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 5,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-477-7772.