Job loss due to the virus? Here’s how bankruptcy may help

Bankruptcy is often a last resort for people who are in serious debt trouble. But if you’re one of many millions of people who have suffered a job loss due to the COVID-19 crisis, it might make sense if it’s your only hope of being able to survive financially during these tough times.

This is a very unpredictable time for all of us. Just when we thought that businesses can start re-opening slowly after being closed down for months, the government re-imposed some of the former restrictions last week and this could just be the beginning. The IRS stimulus checks proved to be a temporary financial band-aid, and the extra $600 weekly EDD payment ends this month. In the meantime, a lot of people have not paid their rent or mortgage in the last 3 months.

It is unlikely that whatever further relief the government decides to provide will keep everyone afloat as the virus crisis continues unabated. For those who were able to get temporary payment forbearances from their lenders and credit card companies, they now have to work out a resolution to catch up on missed payments. How can they do this if they have less income now than they did when the pandemic started?

If you don’t see a clear pathway through the virus crisis after you have lost most or all of your income, bankruptcy may be inevitable for you. But before you get to that point, there may be some advanced planning needed to avoid problems later.

For example, what chapter should you be filing? Do you have any assets that may be at risk? How do you protect those assets, if possible? Which debts can be wiped out, and which debts still have to be paid back after bankruptcy? When is the right time to file?

How does filing bankruptcy affect your ability to credit again in the future, and how long will it take to rebuild credit? What about asset transfers? Have you transferred assets or given money to family and friends to get them out of your name (and if so, how does that affect a bankruptcy filing?). What happens if you file bankruptcy and you’re behind on your mortgage payments?

These are questions I came up with just off the top of my head that people often ask when consulting with me. These are IMPORTANT questions and sometimes they are best asked, not when a person is about to file, but way before a person files so that they can obtain the maximum protection afforded by law. Most people do not realize until it’s too late that a lot of bankruptcy cases require careful analysis and planning with an experienced bankruptcy attorney. Yes, there are traps for the unwary that can be avoided with proper planning.

If you have been recently laid off, don’t automatically assume that you qualify to file bankruptcy to wipe out of your debts just because you’re not making any money at this time. The courts look at your income for the last 6 months as well as current income. And that may also include unemployment benefits that you’ve been receiving since you stopped working. All of this requires a thorough analysis.

For a free evaluation of your case, please call our office at Toll-Free 1-866-477-7772 to schedule a free consultation.


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

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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 1-866-477-777.

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