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Personal Bankruptcy During the Covid-19 Pandemic

By: Jamie L. Harris

With so many Americans facing unemployment and furloughs, personal bankruptcy for many of those individuals may be inevitable. Individuals who have never had financial issues may find themselves forced into bankruptcy. First, bankruptcy courts are currently open. Hearings are currently being held via teleconference through May here in Kentucky. There are no impediments to filing a personal bankruptcy at this time with regards to the courts. Second, unemployment benefits are exempt in bankruptcy. This means your creditors and the chapter 7 Trustee appointed in your case cannot seize these funds. 

Exemptions

Chapter 7 Trustees have been advised not to administer stimulus payments that you and your family have received from the government. There are general exemptions available for most property including homestead, household goods and furnishings, jewelry, and automobiles. Most retirement funds are exempt in their entirety. Due to exemptions, most individuals who file for personal chapter 7 bankruptcy do not lose any property and have their case designated as a “no-asset” case.

Reaffirming Debt

In a chapter 7 bankruptcy, you can choose to reaffirm secured debts such as a home or automobile. For those who are experiencing temporary job loss, you may want to consider having some modified reaffirmation terms worked out. This can be done in advance of the bankruptcy with the creditor or consider filing chapter 13 bankruptcy to stop a repossession or foreclosure.

Bankruptcy Process

After filing for personal bankruptcy relief, you will meet with a chapter 7 Trustee approximately 30-45 days after filing. The Trustee will ask you questions about your assets to determine if there are any non-exempt assets available for distribution to creditors. Typically, if no objections are filed within sixty days of completion of this meeting, then you will receive a discharge of your debts that are eligible for discharge. Certain debts like recent taxes, student loans, and child support are not eligible for discharge.  With the uncertainty of financial fallout from the Covid-19 pandemic, personal bankruptcy may be the only viable option. Bankruptcy can help those who are otherwise unable to work out arrangements with creditors to obtain extended payment plans. If you are interested in exploring personal bankruptcy options, you can consult with one of the attorneys here at DelCotto Law Group.

About DelCotto Law Group

DelCotto Law Group is Kentucky’s asset protection law firm known for its commitment to the lifetime success of its clients. With offices located in Lexington, Louisville and Danville, DLG serves Kentuckians with complicated financial matters, especially in the areas of bankruptcy and complex litigation. For more information please call (859) 231-5800, email info@dlgfirm.com or reach us on our contact page.

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