The COVID pandemic has had an unprecedented impact on our economy. With millions of people displaced from their jobs due to the disease, it is inevitable that many will struggle with debt as they seek new employment. You may even be experiencing this firsthand. And while these circumstances might appear bleak, a bankruptcy attorney at CMC Law are here to provide you with assistance and assurance during these uncertain times.
Bankruptcy attorneys everywhere understand that managing debt is always a challenge, especially if you are unemployed. But before you file for bankruptcy, there may be a few alternative options to consider first.
Explore Accommodation Plans with Your Creditors
If you fear you may miss out on payments due to the economic impacts of COVID, our bankruptcy attorneys recommend you reach out to your lenders. Due to the current unique circumstances, many companies and creditors are offering hardship or “accommodation” programs. These programs allow you to adjust and delay payments or temporarily void interest
charges. In some instances, creditors may offer extended programs with reduced interest rates so you can pay the full balance over a longer period of time. Our attorneys recommend enrolling in these programs because they can prevent you from receiving negative credit scores.
Consult a Credit Counseling Agency
While the bills pile up as you search for new employment, your bankruptcy attorney may advise you to contact a credit counseling agency for assistance. These non-profit organizations can help you manage your debt and make recommendations for next steps based on your financial and long-term goals. They do this by providing budget analysis, which will determine the type of payment adjustments you’ll be eligible for. They also offer additional information about which accommodation programs you may qualify for based on your individual circumstances.
In some cases, they may determine that the best course of action is to file for bankruptcy and advise you to reach out to a bankruptcy attorney.
When It’s Time to Contact a Bankruptcy Attorney
After exhausting accommodation programs and options recommended by credit counseling agencies, it may be time to contact a bankruptcy attorney. They can provide you with information and advice regarding how to file for bankruptcy and which type of bankruptcy filing will be most advantageous for you. Our bankruptcy attorneys often encourage filing if you want to protect certain assets, are sued by creditors or if you receive certain types of income that have protections from lenders like Social Security.
Qualifying for Chapter 7 Bankruptcy According to a Bankruptcy Attorney
While a consultation with a bankruptcy attorney will determine the type of filing you will qualify for based on your individual finances, many people that have been displaced from their jobs due to COVID qualify for Chapter 7 bankruptcy due to the means test. The means test is based on a median income for homes that is determined by the state. In Georgia, the median income for an individual home is $40,546 or $55,061 for households of two. The means test accounts for the previous six months of your income and if those earnings are lower than the median incomes for your household size, you will qualify for a Chapter 7 bankruptcy filing.
What Happens When Filing for a Chapter 7 Bankruptcy?
Since Chapter 7 is a type of liquidation bankruptcy, when your bankruptcy attorney files on your behalf, the majority of your unsecured debts are expunged. These are usually payments including credit cards, medical bills and personal loans. And in many instances, Chapter 7 bankruptcy allows you to keep ownership of your home and vehicle. As a result, this can be an ideal solution for you if you’re struggling to manage debts due to COVID.
The Bankruptcy Attorneys at CMC Law are Here to Help
The COVID pandemic is one of the greatest challenges we will face in our lifetime. If you’re experiencing financial fallout from unemployment due to the disease, know that you are not alone. The bankruptcy attorneys at CMC Law will utilize their knowledge and expertise to help you navigate these uncharted waters.
Contact the bankruptcy attorneys at CMC Law today to schedule a free consultation.