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How the Coronavirus Could Affect BankruptcyThe world is experiencing a global pandemic with the rapid spread of the coronavirus causing cases of COVID-19. Dozens of cases have been reported in Texas, even here in Frisco, and the number is likely to grow as more people are able to be tested. While the public health threat is the priority, there are also concerns about the economic impact it will have. Businesses around the world are shutting down to the public, and the stock market has dropped to historic lows. If the economic effects of the coronavirus pandemic cause you to fall behind on your debts, you may want to consider bankruptcy as a source of relief. If you have an ongoing bankruptcy case, you need to watch for how the pandemic may affect your case.

Virus Impact on Personal Finances

To prevent the spread of the virus, many offices, stores, and restaurants are closing – either voluntarily or by government mandate. Employees may be okay if they can work from home or their employer is willing to pay them during their time off. However:

  • Some workers are going unpaid or are having their payments deferred while their employers are closed.
  • Small business owners may see decreased revenues that hurt their personal finances.
  • There is no telling how long employers will continue to pay workers who are on leave.

People who live paycheck-to-paycheck or are desperately trying to keep up with debt payments may not be able to afford a gap in their income. Creditors may show more patience given the extraordinary circumstances but are not required to do so. If a creditor is threatening to repossess your property or file a lawsuit against you, filing for bankruptcy will put an immediate stop to it and allow you to manage your debts.

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Why Delaying Bankruptcy Can Be CostlyPeople who are heavily in debt may worry about the cost of filing for bankruptcy, but delaying an inevitable bankruptcy is often costlier. Bankruptcy is neither a sign of failure nor the ruin of your personal finances. Yet, some people let these misconceptions prevent them from filing for bankruptcy when it may be their best option. While there may be some immediate costs to bankruptcy, it is a chance for people to clear their debts and start anew. There are several reasons why waiting to file for bankruptcy can make your situation more difficult:

  1. Quality of Life: The pressure of repaying debts can affect your standard of living and personal health. Some debtors save money by forgoing necessary expenses, such as food and medical treatment. The stress can be harmful to a person’s mental and physical health. Bankruptcy protects the money you need to pay for basic living expenses and gives an eventual resolution to your stress.
  2. Risk of Litigation: You may be content to slowly repay your debts, but your creditors may not display the same patience. By filing a lawsuit against you, your creditor is seeking immediate compensation for the debts you owe through mechanisms such as attaching your bank accounts. You still have time to file for bankruptcy, but the lawsuit puts you on the defensive and requires you to act quickly.
  3. Wasted Assets: Filing for bankruptcy allows you to protect key properties through the various exemptions available. Your home, vehicle and other properties of a certain value can all be exempt from your creditors. However, people who avoid bankruptcy may choose to sell important properties to help with repayment. If they eventually file for bankruptcy, it will be too late to exempt and save properties that have already been sold.
  4. Rising Debt: Some people try to avoid bankruptcy because they believe they can get by with their own repayment plan. However, keeping up with debt payments can be difficult if you lack the financial resources. Making minimum payments may prevent immediate default, but will allow interest rates to accumulate on the debts. If a Chapter 13 bankruptcy is filed, you will be facing a larger debt that may have to be paid in full, depending on your repayment plan.

Deciding on Bankruptcy

It can be difficult to know when is the right time to file for bankruptcy. Bankruptcy is an option you should at least consider if you are feeling overwhelmed by your debts and are unsure of how to repay them. A Frisco, Texas, bankruptcy attorney at The Page Law Firm can advise you on how bankruptcy could help your financial situation. To schedule a free consultation, call 214-618-2101.

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National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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