Bankruptcy has always been a last resort for people who are struggling with debts that they can no longer pay. Most people would do what they can on their own and will only consider doing it once they know they have run out of options. Unfortunately, by the time they get to the point of making the decision to file, a lot of them have also exhausted their savings and depleted their retirement plans in their efforts to avoid bankruptcy. I see this happen all the time.
If you are one of the millions of people laid off due to the virus, bankruptcy can provide a much-needed “lifeline” if you are unable to pay your bills. While we are facing uncertain times with no way of knowing when things can go back to the way they were before the pandemic, bankruptcy can give you a sense of control over your finances and help you stay afloat until the storm has passed.
If you have lost your job due the virus, there is less or no money to pay the bills. A lot of people are receiving EDD unemployment benefits, but it is often not even enough to pay for basic living expenses. So a lot of them have stopped paying their rent or mortgage payment hoping that after the eviction moratorium is over, they will be able to work out a repayment plan with their landlord or mortgage lender in order to prevent eviction or foreclosure. As I write this article, the second stimulus bill is still pending in Congress and it is not clear whether an agreement can be reached before the end of the year. With EDD benefits ending for a lot of people, the wait is nerve-wracking because people do not know how they are going to survive as the new year starts.
While state and federal governments, as well as many creditors, have worked hard to provide safety nets in the form of payment forbearances, these are all temporary measures and short-term fixes. For that reason, it is best for you to have a plan B just in case it takes much longer than expected for you to be employed and regain your income.
On thing you should NEVER do is to ignore creditors during this time. It is best to stay in touch with them and let them know about your financial hardship. If they agree to postpone your payments temporarily, get the agreement in writing to protect yourself. Do not just stop making payments and assume that your creditors know what is going on. If you are a homeowner and have stopped paying your lender under a forbearance agreement, find out exactly how your lender will assist you in catching up on the missed payments after the forbearance period is over.
If you have the financial resources to negotiate delinquent debts with creditors, that may be a way to avoid bankruptcy. But I suspect as I watch what is currently going on with this pandemic that for a lot of people, bankruptcy may be inevitable. I know that a lot of people have resorted to borrowing money and using their credit cards to pay for necessities. The other day, someone was just telling me how he has accumulated over $30,000 in debt since March after getting laid off due to the virus.
What I am finding these days is that a lot of people who normally would not have qualified for bankruptcy before the pandemic due to high income are now eligible due to lack of or insufficient income. So, for these people, right now is the BEST TIME to file and get rid of their debts while they can. If they wait until they go back to work and make the same amount that they were making before, they may not qualify and be stuck in debt for a long time. The problem is that if these debts are now delinquent, they are now at risk of being sued by creditors and having their wages garnished. In many cases, TIMING IS CRUCIAL when filing bankruptcy and it is best to consult with an experienced bankruptcy attorney who can assess the situation to see what is best.
* * *
NOTE: Due to COVID-19 pandemic, I am offering free consultations BY PHONE to anyone who needs help in dealing with their debt problems.
* * *
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
