In the year we have been living with the Coronavirus, families and businesses alike have experienced untold trauma and heartache.
Americans are still facing deep personal hardship and financial strain in the face of steady Covid hospitalizations and unprecedented small business closures around the country.
When you’re trying to keep your family safe, healthy, and fed during a global disaster, it’s easy to let personal or business debts add up over time. If you’re being harassed by debt collectors, in danger of home foreclosure, or facing the shuttering of your small business, declaring bankruptcy can give you a fresh start and empower you to rise above the harrowing damage wreaked by the Covid-19 pandemic.
Don’t let your family become another victim of the Covid economy; if you’re looking to efficiently handle bankruptcy and cleanse your past debts, let’s discuss a few key questions to ask before you file.
1. When Do I File For Bankruptcy?
If you find yourself in an unsurmountable mountain of debt with no alternatives, it may be time to declare bankruptcy. Filing is a complicated legal matter and requires the expert guidance of a professional. The first step in declaring bankruptcy is to contact a qualified bankruptcy law firm in your area.
Don’t be afraid to contact a lawyer. Some states like Mississippi saw soaring bankruptcy filings in the wake of Covid-19, especially being that it’s one of the top states hit the hardest economically since the start of the pandemic. Mississippi residents and businesses turned to bankruptcy as their fresh start for a journey to financial freedom.
2. What Type Of Bankruptcy Should I File?
There are several different types of personal bankruptcy. Two of the most common are Chapter 7 and Chapter 13, named for where they are found within the federal bankruptcy code.
Chapter 7 bankruptcy, also referred to as a liquidation, is most common for an individual to file. When Chapter 7 is filed, the court appoints a trustee to sell or “liquidate” your tangible assets to pay a portion of your debt back to your creditors (with exceptions or exemptions claimed).
In Chapter 13 bankruptcy, the court creates a plan for you to pay back your debts over a period of several years without losing or liquidating assets. Either way, with the help of a lawyer you will be able to pay off your debts or let the courts rule them as discharged.
3. Are There Alternatives To Declaring Bankruptcy?
After declaring bankruptcy, you’ll likely be able to repay your debts, remain in your home, or save your business, but there is potential for serious repercussions (such as a damaged credit score) that can affect your future purchasing power. Be sure to look at your total amount of debt to see if the alternatives to bankruptcy are best for you or if filing will be more beneficial.
One alternative to consider is negotiating with your creditors to create a payment plan for a large debt such as a mortgage. Many lenders have shown mercy and lenience due to the pandemic, and it’s worth exploring alternatives before you make the choice to file. There are also many small business loans available to you through government Covid assistance legislation.
4. How Can Filing For Bankruptcy Help Me and My Business?
Yes, declaring bankruptcy can considerably lower your credit score. However, the process is not entirely negative, and in some cases, filing can actually help you and your business.
If you decide to file for a Chapter 13 or Chapter 7 bankruptcy, as discussed above, the mark will remain on your credit score for 7-10 years. After that, it will be removed. If you commit to wisely using credit and consistently making the payments, you will eventually be able to raise your score.
While there are some negative repercussions initially, you will be able to wipe your debts from your record and begin rebuilding your personal finances or small business without the undue burden of crushing debt.
Declaring bankruptcy offers you a clean slate when you’re in a dire financial state. If you’re afraid your family or business is going to fall prey to the declining pandemic economy, consider contacting a bankruptcy lawyer to learn more about filing today.