The pandemic of 2020 has created financial troubles for many. Some of the financial problems are caused by being laid off or furloughed. If you and your family have been hard hit by the pandemic through job loss and mounting debt, you probably looking for answers about how to handle this situation.
Questions to keep in mind
Here are some questions to consider:
- Is your layoff a short-term problem or are you likely to be rehired soon?
- Would a restructured payment plan help you pay bills?
- Given more time, could you pay your bills?
- Do you own or rent your home?
- Did anyone co-sign loans for you?
- Do you have expenses you could eliminate such as a car lease?
How do chapter 7 and chapter 13 bankruptcy differ?
Making the right choice on whether to file Chapter 7 or Chapter 13 bankruptcy is entirely dependent upon your individual circumstances and the nature of your debt.
Generally, Chapter 7 bankruptcy is a way to wipe the slate clean regarding unsecured debt. It is often referred to as a fresh start bankruptcy. People may fear that by wiping the slate clean, they will lose everything, but that is not true. The bankruptcy code allows for you to hold onto certain property when filing for Chapter 7. But even though having a clean slate may sound appealing, it isn’t the best option for everyone – especially for individuals who are underwater concerning their mortgage payments. A bankruptcy attorney can help you review your assets and look at the best option for protecting your home and other assets.
Chapter 13 bankruptcy mainly involves working out a way to pay debts over a longer period of time. This is often involves negotiating lower monthly payments with creditors. Chapter 13 bankruptcy, therefore, is a good option for people who need help negotiating a new payment structure. Chapter 13 is also be the option to pursue if you want to fight foreclosure so you can stay in your home and you don’t have a lot of unsecured debt.
Bloomberg news service wrote in a recent article that over the next year, they estimate there will be a record number of bankruptcies filed. This is in large part due to the high unemployment created by the pandemic, including layoffs and furloughs in record numbers. Before filing for bankruptcy, people should examine all of their options.
No matter your situation, speaking with a bankruptcy attorney can help you understand your options. Knowing you have options reduces stress and can help you weather this difficult time.