Coronavirus Pandemic and Consumer Bankruptcy
According to a recent report in MarketWatch, millions of Americans are now jobless, including thousands of Floridians, which will likely lead to a surge in personal bankruptcy filings. Although Florida Governor Ron DeSantis only recently issued a statewide stay-at-home order, Orange County residents have been under a local stay-at-home order since the last week in March. With that order, residents were only permitted to leave home for essential business, and many restaurants, retail establishments, and other businesses began to close their doors.
In the coming weeks and potentially months, more Orlando-area residents are likely to be jobless and will have difficulty paying debt. We want to say more about consumer bankruptcy and its relation to the coronavirus pandemic.
Bankruptcy Cases Likely to Increase
According to the MarketWatch report, the rate of jobless claims is likely to be much higher than during the 2008 financial crisis. The recent spike of 6.6 million job-loss filings is a record high for such a short time period, exceeding any weekly rates of job-loss claims during the foreclosure crisis and recession of just over a decade ago. In addition to losing their jobs and being unable to pay existing debt, many families are turning to credit cards to buy necessities, such as food and medicines.
Beyond taking on additional credit card debt, families in which one or more members contracts COVID-19 could also be facing significant medical debt. All of these factors, in turn, are likely to lead to a surge in consumer bankruptcy filings.
Credits Experts Say Bankruptcy May Be Better Than Paying Off Debt During the Coronavirus Pandemic
Some credit experts even say that keeping any cash (as well as your stimulus check) instead of trying to pay down debt may be the smarter choice during the pandemic. According to an article in Yahoo! Finance, one credit expert recommends that, if you need the money you would be using to pay down debt to provide food and other necessities for your family, the latter are much more important now. For people who cannot pay debt, bankruptcy would likely be a better option than being unable to eat or to have medications during the pandemic.
How the Stimulus Affects Consumer Bankruptcy Cases
As you are thinking about the coronavirus pandemic and personal bankruptcy, you should also be aware of some of the terms in the stimulus bill that was signed in late March (the CARES Act) that might impact your bankruptcy case. According to MarketWatch, the stimulus checks that are being sent to individuals will not be counted as income if you are taking the “means test” to qualify for Chapter 7 bankruptcy. In addition, those stimulus checks will not be counted as disposable income for purposes of Chapter 13 bankruptcy.
Further, if you are already in a Chapter 13 bankruptcy repayment plan but are now having trouble making your monthly payment as a result of the pandemic, you will have one year to change the terms of your repayment plan, and you may be able to extend the terms of your repayment plan for up to two years.
Contact an Orlando Consumer Bankruptcy Lawyer
If you have questions about your rights as a consumer or debtor, or if you have questions about filing for consumer bankruptcy, an experienced Orlando bankruptcy attorney at our firm can assist you. Contact Anderson & Ferrin today.