With the current Coronavirus pandemic, most businesses are closing down, and people are losing their jobs, making livelihoods unbearable. With this situation, individuals cannot repay or service their debts, leaving them with just one option: filing for bankruptcy. Is it a good idea during this pandemic? Is it doable?
In this article, we’ll discuss steps you should take before deciding to file for bankruptcy during this COVID-19 pandemic. Let’s check them out:
Financial Instability after being laid off
Losing your job might be hectic and unforgiving, especially on this pandemic. The reason is that you can’t pay your bills or sustain your livelihood as before. Based on the pandemic’s live updates regarding job losses, people are losing jobs in this pandemic because of low business caused by social distancing and stay-at-home procedures. Most companies have only kept essential workforce who mostly are working from home to make ends meet. But what if you are the part that got sacked? This means your spending and cash will be limited, and if you had loans, that would be worse. While these measures will take longer than expected, you need to find ways to settle your loans or file for bankruptcy if it turns to the worst level. With bankruptcy, you can keep creditors away for some time as you seek on the ways of surviving. But first, check on your stability.
Getting the stimulus package
Receiving a stimulus package might be a good idea to everyone who has lost their job or business due to the Covid-19 pandemic. But is it enough? How long will it make you survive? Will it pay your debts? I guess these are questions you will be asking yourself, especially if you have mortgages and loans with banks. What’s next? It means you will need to find ways to settle your pending debt. Stimulus packages must be repaid in the long run. Always check if you can repay on time and how long it will take to repay. If you don’t see yourself in such a position, you can consult experts like TL who will help you with ideas. Specialists from TL Brown is a bankruptcy Law Firm in San Diego always insist on looking for a platform that specializes in bankruptcy, and that can help you with your filing if you don’t have any other option. By so doing, you will experience competency services with full professionalism and accessibility and a team that will work to surpass your expectations.
Making arrangements with your Creditors
After losing your business or job, most people take the first crucial steps, including settling bills and talking to landlords and other essential service providers on how you will be paying their bills. Some of the bills you will have to take care include the below:
- Car loans, mortgage, and credit card payments: most of these creditors might give you some grace period. Either one to three months, depending on your investment. But what will be the next course after this has elapsed?
- Student loans: In public schools, most governments have put on hold paying off student loans in this pandemic. But still, there are those in private institutions.
- Utility bills: in most cases, these are provided by the local and state governments. But still, they will need to be paid at a later date. Failure to pay in bits will make them accumulate or become unbearable. What will be the plan?
- Other debts: always check if you can pay or waive other debts not listed above as they may not be covered on the bankruptcy policies.
Developing a Financial Approach
After paying your bills and negotiating with creditors, you need to start planning your finances. In case you do not have other sources of income to pay bills, it’s high-time you reduce these bills or set money aside to pay them to avoid cut-offs. You don’t have to file for bankruptcy at this level unless your position is tight and cannot be redeemed at this level. There is still time for that if you play your cards well with your finances.
Negotiating for your debts
At this level, you are nearing the bankruptcy level. It has reached a level you can’t pay debts and service loans. What do you do? Do you rush to file for bankruptcy? The answer is no! It’s still too early. Try to negotiate with your lenders. If you have been paying them well and keeping your promises, there is no way they shouldn’t listen to you. Sit down with them and come up with a repayment plan when things are back to normal. Some lenders at this juncture are ready to accept whatever you will pay them. You might decide to come up with a payment plan, whereby you will be paying a small percentage of what you used to pay before the crisis. If you have negotiated with them on this and it couldn’t work, then the next step is inevitable.
File for Bankruptcy
Yes, you should. There is nothing more you can do after exhausting all the above steps. But still, remember, there are services you can’t file for bankruptcy like paying your rent and utilities. Bankruptcy is the best option you can take to keep your records safe and to ensure your reputation doesn’t go at stake. One of the benefits of filing for bankruptcy is that you will be able to halt or wipe out your debts. This is the best option to take after losing your job or business and when other options have failed. However, pay all your bills if you can. Suppose you aren’t able to get a bankruptcy lawyer who will help you file for the ultimate process: bankruptcy. Most of these lawyers offer free consultation services to their clients. Before facing them, get advice from experts on how to go about it.
Sometimes after losing our businesses or jobs, we do not have any other options to take but file for bankruptcy. It is hard to go, but for someone who has hit hard rock, there is nothing you can do but fall into it. However, try as much to see the options discussed, and if all does not go well, embrace it. It’s better that way than running away from debts, which will leave your reputation at stake. This article has highlighted the best procedures to take, and we hope they will be beneficial to you.