bankruptcy due to coronavirus

Bankruptcies Likely to Increase During COVID-19 Outbreak

The coronavirus pandemic has caused an unprecedented public health emergency in the US, prompting lockdowns in most states and the closure of countless businesses. Among the hardest hit include bars, restaurants, and other businesses where people tend to gather in large groups. Locally, the casinos in the Gulfport and Biloxi areas are empty, leaving thousands of Mississippians without work.

The federal government has responded boldly to the economic disaster created by the COVID-19 crisis with a $2.2 trillion stimulus package. Among other things, this legislation provides a $1200 payment to most Americans, unemployment benefits up to a worker’s full salary for four months, disaster loans and grants for small businesses through the SBA, and bailouts for businesses in industries that have been impacted the most by this pandemic.

This is the most expensive piece of legislation in US history, a response that is intended to help businesses and their workers get through this lockdown period and get back on their feet when this is all over. The problem is that we do not know how long everything is going to be closed down and when nonessential businesses will be able to open back up again. It could be shortly after this article is published, or we may be waiting until the summer or longer.

When everything gets back up and running, it is difficult to predict whether the shutdown will have the economic impact of a major natural disaster that delivers a temporary blow to the economy but quickly bounces back, or if we will have Great Depression-like conditions that will last for the foreseeable future. One thing we can be pretty certain of is that, even with the massive government stimulus package, this pandemic will hit a lot of individuals and businesses very hard financially, and many will have no choice but to file for bankruptcy in order to get out of it.

Consumer debt in the US exceeded $14 trillion during the final quarter of 2019, which is more than a trillion higher than the highest levels recorded during the Great Recession of 2008-2009. The main difference this time is that before the pandemic hit the economy was strong and unemployment was very low, which allowed a majority of consumers to be able to at least manage the debt they had.

But with millions of Americans suddenly losing their jobs, it could become a lot more difficult to provide for the basic necessities like rent, utilities, and food. This means that making even the minimum payments on credit cards will have to take a back seat.

Should I File for Bankruptcy while the Coronavirus Pandemic is Ongoing?

There are many people out there that had been considering filing for bankruptcy before the COVID-19 outbreak hit and they are now wondering if they should wait for their stimulus check and any other relief payments that they are eligible for before filing. The answer to this question depends on your specific situation.

In general, if you had reached the point where bankruptcy was the best option to get you out from the massive burden created by a large amount of debt, then it is likely that a $1200 stimulus check will not change things a whole lot. However, if you qualify for unemployment, you may be receiving more than what your previous weekly pay was after the federal government kicks in an extra $600 per week.

Will this be enough for you to make ends meet, or is this just a temporary fix? The extra stimulus for unemployment benefits only goes on for four months, so you will need to consider what your situation will be when that runs out.

In some cases, it might make more sense to file for bankruptcy right away and use the stimulus and extra unemployment benefits to cover the legal and filing fees and to try to get back on your feet financially. Again, the right option will vary on a case-by-case basis, and this is something you should discuss with your bankruptcy attorney.

Filing for Bankruptcy in a Post-COVID-19 World

If you have decided that it is best for you to file for bankruptcy immediately, you can still do so even with the limited court schedule. Most of the steps in the bankruptcy process can be done remotely, and the Trustee 341 meetings that would normally be held in person are currently being done by telephone.

Your case will most likely not move along as quickly as during normal times, but you can still get an automatic stay immediately in order to relieve you from creditor harassment, and as always, the sooner your bankruptcy is discharged, the sooner you will be able to gain a fresh start and rebuild your financial life.

At the Gardner Law Firm, we want you to know that we are here to serve you even while the coronavirus pandemic is ongoing. We are taking all of the precautions, and like everyone else, most of our work these days is being done remotely. If you are considering bankruptcy and you are in Biloxi, Gulfport, Pascagoula, Ocean Springs, or anywhere in Southern Mississippi, we invite you to contact us for a free initial consultation. Message us online or call our office today at (228) 900-9618 to speak with a member of our legal team. We look forward to serving you!