Besides being life-threatening, the COVID-19 pandemic has also been financially devastating for many workers. In fact, as of April 23, the overall jobless rate for the United States has reached 23 percent, which is the worst our country has seen. As a result, more and more Americans are considering filing for bankruptcy, which is the legal process designed for helping people get out of debt. Even though most legal firms and courts are in lockdown, you can still proceed with a bankruptcy filing. Here's what you need to know about COVID-19 and filing for bankruptcy.
1. Gather Your Documents
To file for bankruptcy, you must collect important paperwork or documents. For example, you'll need to have your paycheck stubs and/or statements from any other additional income for the past several months. Other paperwork includes those, such as bank statements, tax reports, student loan documents, statements from any creditors and a list of your expenses.
2. Call Your 341 Meeting of Creditors
People filing for bankruptcy must attend what's know as a meeting of creditors or a 341 hearing, which is typically done in a meeting room. But since in-person meetings have stopped during the COVID-19 pandemic, hearings are conducted by telephone. This generally occurs about a month after filing for bankruptcy. Once your lawyer gives you the needed information, you call into the 341 meeting from home.
3. Select a Bankruptcy: Chapter 7 vs. Chapter 13
The two most common bankruptcy plans are Chapter 7 and Chapter 13.
- Chapter 7, a liquidation bankruptcy, is for people with not much equity or no equity at all. In simple terms, Chapter 7 is for debtors who fall below a specific income level. In other words, it's for those with huge debts and very little income or assets. This bankruptcy is usually simpler and doesn't take as much time as a Chapter 13 bankruptcy. Although Chapter 7 removes most of your debts, and you don't have to repay your dischargeable debts, it remains on your credit record for ten years,
- Chapter 13—Unlike Chapter 7, with a Chapter 13 bankruptcy, which is a type of restructuring bankruptcy, you have to repay a portion of your debts. How much you have to pay back can depend on your income as well as the amount of equity in your property. In exchange for participating in a repayment plan, you can keep all your property, which is not the case in a Chapter 7 bankruptcy.
4. Contact Us
Filing for bankruptcy requires the professional legal skills of a highly trained and experienced bankruptcy attorney. If you're looking for an exceptional legal firm, look no further than the Law Offices of James C. Shield, where we've helped countless clients determine their best options for debt relief. We also assist with probate matters. To learn more about our high-quality legal services and to set up a free bankruptcy consultation, contact us.