Should I file for bankruptcy now? Or should I wait until the pandemic is over? What about foreclosure / eviction proceedings on my home? What about the hold on my credit cards or loans? What if I’ve lost my job and have only collected unemployment, which isn’t enough to pay for all my expenses? How does COVID-19 affect all this?
While I can’t offer specific legal advice, you might want to consider holding off on filing a bankruptcy petition for a while. Here are 3 reasons why:
Foreclosures / Evictions: Because of COVID, there has been a moratorium (stay) on foreclosure and eviction actions in the courts. So, it is likely that your mortgage company or landlord can’t pursue those lawsuits during the pandemic. Thus, you aren’t about to lose your home or a place to live. When you file for bankruptcy there is an “automatic stay” of any similar lawsuits and you can then work out a way to catch up on the past due amounts. But since there is an “automatic stay” due to the pandemic, you may not need the protection of a bankruptcy court right now. This will likely change once the courts have lifted the restrictions from the pandemic, but this should be one consideration on the timing of filing bankruptcy, which may not be right now.
Credit Cards and Other Debts: Similarly, most creditors are also giving breaks on collection / repayment of credit cards and other debts / loans. However, this is only going to last until the pandemic is up. Another concern is if you filed for bankruptcy and after filing you incurred more debt (like paying bills or for food with credit cards), the later incurred debt may not be discharged by the bankruptcy. So if you need your credit cards or loans to keep you afloat during the pandemic, you may not want to file for bankruptcy yet.
Unemployment Benefits / Income: If you lost your job before or during the pandemic and are collecting unemployment, that is income. Any income is an asset that can be used in bankruptcy to pay off creditors. In addition, the federal government gave additional funds to people who lost their jobs or had their businesses affected by the lockdowns resulting from COVID-19. Money received within a period before bankruptcy can be reclaimed and used as an asset, especially if that money was used in a “preferential payment” to one or more creditors (for example, if you paid back your parents in full for the money they loaned you to make it through, but didn’t pay other creditors). You may not want to take that risk, especially if the unemployment benefits are the only income you have right now.
Conclusion: So, you may want to consult with a bankruptcy lawyer to determine the best time to file for bankruptcy. That time may not be right now. Contact our office via email firstname.lastname@example.org or phone 856-335-5291 if you reside in New Jersey and want to have a consultation about bankruptcy options.