Covid-19 bankruptcy has been an issue sweeping the nation. If you suffered bankruptcy during the pandemic, here’s what you need to know.
Covid-19 bankruptcy has been an issue sweeping the nation. If you suffered bankruptcy during the pandemic, here’s what you need to know.There’s no denying that 2020 was a year for the record books. When the WHO declared a COVID-19 pandemic in March 2020, things rapidly began to go downhill in the United States.
This pandemic has affected millions of people across the country. The unemployment rate rose to levels not seen since the 1930s. As a result, many Americans experienced serious financial issues.
A year later, there are still many Americans who are suffering. Many people who have found themselves in debt due to the pandemic have filed for bankruptcy.
COVID-19 bankruptcy is an issue that’s still affecting a large number of Americans. If you were one of those who filed for bankruptcy, you need to read this.
The Truth About Filing Bankruptcy
In this ongoing pandemic, it can be hard to get the facts. There is a lot of false information out there about the effects of bankruptcy. This is causing a lot of confusion among people who suffered a bankruptcy.
We want to dispel any misconceptions and myths out there. Bankruptcy is designed to help people who have an unmanageable amount of debt experience relief. In most cases, bankruptcy can help to reduce or even end your debt.
This can help save your home, which is the last thing that you want to lose. It can also help stop bill collectors from hounding you. Consider these potential benefits.
Stimulus Payments and Debt Collection
Did you receive stimulus payments during the pandemic? People with debt have concerns over their stimulus check as they fear it will be taken. Unfortunately, the reality is that stimulus checks aren’t safe.
On March 27, 2020, President Donald Trump signed the CARES Act into law. It was implemented to address issues that arose as a result of the COVID-19 pandemic.
Under the CARES Act, eligible taxpayers were given stimulus funds. On December 27, 2020, President Trump signed the Consolidated Appropriations Act of 2021, CAA 2021. The second stimulus check went out as a result of this law.
Finally, on March 11, 2021, President Joe Biden signed the American Rescue Plan Act of 2021. And a third stimulus check was issued.
Any creditors or debt collectors have a right to seize the stimulus check. This is an issue that debtors should be concerned about. The CARES Act doesn’t protect against seizures of the stimulus checks that were part of it.
Even if a person files for bankruptcy and doesn’t have their funds placed in a bank account, the money can be seized through a levy or garnishment.
The same goes for stimulus checks released by the American Rescue Plan Act of 2021. This law doesn’t protect against private creditors going after that money.
There is good news though. The CAA 2021 does protect stimulus payments. There can’t be any garnishments of stimulus payments for debts.
Changes You Need To Know About
There are changes to the bankruptcy code you need to know about. The CARES Act amended this code.
One of the changes concerns the definition of “current monthly income.” The changes made can help to determine how much the debtor will pay according to their plan.
What happens to people who have defaulted on mortgage payments? The CAA 2021 states that Chapter 13 debtors with defaults on up to three mortgage payments may claim Chapter 13 discharge.
On March 27, 2021, President Biden signed the COVID-19 Bankruptcy Relief Extension Act. This law extends personal bankruptcy relief provisions that were part of the CARES Act and CAA 2021.
There are key provisions that extend until December 27, 2021. One of these provisions states that stimulus payments aren’t part of the bankruptcy estate.
It also states that debtors in bankruptcy can’t be denied a mortgage forbearance or protection. This can give debtors peace of mind if they have been served an eviction or told they’re facing foreclosure.
This amendment extends other key provisions until March 27, 2022. Any Chapter 13 debtor with a plan in place before March 27, 2021, who’s experiencing financial hardships, can make changes to the plan.
The Chapter 13 debtor can also move the plan so they can make planned payments over seven years. This amends the provision that called for planned payments to occur over a three- or five-year period.
This option is only for people in Chapter 13 who can show they’re experiencing financial issues because of COVID.
Is Filing Bankruptcy an Option For You?
If you’re experiencing financial issues, you may consider filing for bankruptcy. A bankruptcy attorney can create a bankruptcy petition for you. The bankruptcy attorney will collect the necessary documentation to file the petition with the court.
You can expect this type of attorney to explain the process to you, so you know how it works. The attorney will go over the benefits of Chapter 7 bankruptcy, as well as Chapter 13 bankruptcy. This information will help you determine if bankruptcy is right for you.
The bankruptcy attorney you hire will take the time to explain all the laws in this article. The attorney will inform you how the laws can affect you once you file for bankruptcy.
Filing for COVID-19 Bankruptcy
If you do find yourself experiencing any financial issues, now is the time to act. You can file for COVID-19 bankruptcy if you owe money to creditors. You want to make sure that you can protect your assets.
The last thing you want is for creditors to come after your stimulus payments or your home. Get the peace of mind you want and need.
To learn more about COVID-19 bankruptcy, please call us at (402) 415-2525 to schedule a consultation.
