COVID-19 Bankruptcy FAQ
Updated April 29, 2020
Millions of Americans have been suddenly thrown into financial chaos due to the Coronavirus Pandemic. If you are facing a heavy debt burden and uncertainty regarding your income, bankruptcy might be a possible solution for you.
Is it possible to file for bankruptcy right now?
Yes. New bankruptcy petitions are filed with the United State Bankruptcy Court electronically. When the petition is filed, a case number is assigned automatically and a date for the 341(a) meeting between the bankruptcy court trustee, creditor, and creditor’s attorney is scheduled. Until June 1, 2020, the 341(a) meeting will be conducted by telephone.
How can filing for bankruptcy help me?
Bankruptcy is available to a person or business that seeks relief from debts it cannot afford to pay. There are several forms of bankruptcy. The most common is the Chapter 7 personal bankruptcy, which allows an eligible person to wipe out most or all their debts and start over with a clean slate. Another option for individuals is Chapter 13 bankruptcy, which is a court-supervised plan under which some or all debts are repaid over three to five years. Businesses can utilize either Chapter 11 (reorganization) or Chapter 7 (liquidation).
How can I find out if I am eligible for bankruptcy?
Chapter 7 bankruptcy is available only to individuals or couples who have income below limits established by the US bankruptcy code. If you cannot qualify for Chapter 7, there is a good chance Chapter 13 will be available to you. There are also certain qualifications for businesses. Contact my office to discuss the options available in your unique situation. There is no cost or obligation.
How quickly can I file and get relief?
As soon as your case is filed, creditors are notified and are prohibited from calling and mailing you. The calls will stop almost immediately. And for any creditors who get through, you can tell them to leave you alone and call your lawyer. With Chapter 7, it takes approximately 120 days from filing your case to having your debts officially eliminated (discharged).
What effect will bankruptcy have on my credit?
Most individuals and businesses considering filing for bankruptcy already have damaged credit profiles due to maxed out credit cards and late payments. But within as little as two to three years after filing bankruptcy, your credit rating will begin to improve if you handle your accounts responsibly. You may even be able to get a car loan or other forms of new credit. Within as little as five years, it is possible to qualify for a mortgage loan. In other words, even though the bankruptcy will appear on your credit file for up to 10 years, it does not necessarily impact you for all that time.
How much does it cost to file for bankruptcy?
Through June 30, I am reducing my fee for Chapter 7 filings from $1,500 to $1,000 in order to assist anyone that has been economically impacted by COVID-19 and the stay at home orders. The court filing fee is $335. Fees for Chapter 13 and business bankruptcies vary; contact my office for details.
Are you considering filing for bankruptcy? Contact South Bay Debt Relief and Bankruptcy Attorney Barbara Craig today to schedule a free, confidential consultation and learn about your options for getting relief from your debts. Serving clients in San Pedro, Lomita, Palos Verdes, Torrance, and other South Bay area communities.