Bankruptcy and COVID-19: What You Need to Know and How an Attorney Can Help

Nobody wants or expects to file for bankruptcy. However, when the COVID-19 pandemic ends up laying off millions of people, bankruptcy becomes a promising option for many. Especially when it can offer the relief that individuals need to help them continue to operate their business or provide them with a new beginning for a better future.

Before you make the critical decision of whether you need to file for bankruptcy, continue to read below and see how the COVID-19 outbreak has affected bankruptcy laws in Louisiana, what other steps you can take before filing, and how a bankruptcy attorney can help you.

Bankruptcy Changes During COVID-19

COVID-19 has brought with it many changes. Not only affecting our daily lives but changing how courts operate and how legal procedures are enacted across the country. The following bankruptcy rule updates have been implemented under the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act to help individuals during this Corona outbreak:

  • Individual Debtor: Under this Act, a debtor with a pre-existing Chapter 13 repayment plan can extend the length of their plan. However, to obtain this modification, the debtor needs to show a material financial hardship resulting from the pandemic.
  • Stimulus Checks: Stimulus checks and other federal law payments related to COVID-19 will not have an impact on debtors wishing to file for bankruptcy under Chapter 7 or Chapter 13.
  • Business Relief: For businesses looking to file for bankruptcy under Subchapter V of Chapter 11, the Act has substantially increased the debt limit, while also helping to relieve some financial challenges that companies face when filing for bankruptcy. It did this by stopping quarterly fees and stretching out payments, while also simplifying and speeding up the process so that businesses can get relief as soon as possible.
  • Original Signature Waivers: Usually, a bankruptcy attorney needs to get an original signature from their debtor client on their petition to file for bankruptcy. However, during the COVID-19 pandemic, particular bankruptcy courts in Louisiana have decided to waive this requirement, and now debtors and their attorney can review the paperwork virtually.
  • Section 341 Hearing: Debtors who file for bankruptcy under Chapter 13 or Chapter 7, usually have to take part in a meeting of creditors under Section 341 of the Bankruptcy Code. However, because of COVID-19, many of these meetings are now being conducted by telephone or another form of remote communication. You will need to check your specific court’s website to verify how they will be modifying their procedures for these meetings.

What Can you Do To Protect Yourself From Bankruptcy

With everything going on, it may be difficult to fit anything else onto your plate. Yet, by taking a minute and familiarizing yourself with possible programs that can conserve you money right now, it can help you avoid bankruptcy later on. And even though things may seem dire at this moment, there are steps that you can take to protect your rights and your business, and help prepare you for the best outcome post-COVID-19:

  • Student Loans: The government has allowed students to defer loan payments temporarily. Those with private loans should check with their provider if they have similar options.
  • Mortgage, Credit Card Payments, Car Payments: if you are having a hard time making payments, many institutions are offering loan extensions and deferred payment options. Some lenders are even offering emergency loans for those that need money right now.
  • Utility Bills: Many towns and cities have prohibited utility shut-offs during this Covid-19 pandemic. Yet, it is crucial to keep in mind that you will still need to pay the balance later, and you need to plan accordingly as the pay-off amount can be quite large.
  • Negotiate Your Debt: If you put your payments on hold, during this crisis, you may be able to negotiate lower fees with your creditors and even your landlord when you start the repayment process.
  • Government Assistance: Take a look into specific government programs that offer an extensive range of grants and no-interest loans to help small businesses stay afloat during this pandemic.
  • Do Not Stop Payments: Make sure you do not stop making any payments based on anything you heard or read on the internet. To qualify for any programs, you will have to apply and then wait to receive a qualification confirmation. If you stop paying before you are allowed to, it can result in many issues for you later on.

Why You Need an Experienced Bankruptcy Attorney

During these unprecedented times, it is no surprise that many people are worried about their financial stability. With all the “what ifs” that surround countless families, trying to figure out the next step can leave many with a lot of fear, tension, and worry.

On top of all the stress, the many new legal procedures that are being implemented because of COVID-19 can leave anyone feeling confused and uncertain. That is why now more than ever, it is essential to contact a knowledgeable and trusted bankruptcy attorney that can help you. These lawyers can:

  • Provide you with the up-to-date information to help you understand how your local, state, and federal laws have been affected due to COVID-19 and how they will affect you individually or your business.
  • Help you figure out what legal actions work best for you personally or your business.
  • If you choose to file for bankruptcy, they will provide you with the guidance and support you need to help protect your business’s future or your individual assets.

Call Stephenson, Chávarri & Dawson, L.L.C. Today

At Stephenson, Chávarri & Dawson, L.L.C., we understand what a challenging time this is for you and your loved ones. That is why our firm’s goal is to provide you with the clarity you need, the legal options you want, and the peace of mind you and your business are counting on. Do not wait any longer, contact our firm today, or call us at 504-523-6496, to speak with one of our experienced bankruptcy attorneys.

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