Our Bankruptcy Attorneys Answer Your Frequently Asked Questions
SARS-CoV-2 (the novel coronavirus) has disrupted the lives of millions of people in the United States and abroad. In addition to the significant health threat posed by the virus, many businesses, individuals and families face financial uncertainty as the virus continues to spread. In fact, millions of people lost their jobs in March and April, and more job losses are likely to occur this summer.
If you are a business owner or person who suffered job loss, and are now facing potential issues with creditors, then you may have the option to protect your assets by filing for bankruptcy.
However, the novel coronavirus could affect certain aspects of your bankruptcy case. In the following guide, our Kansas City bankruptcy lawyers provide some guidance by answering frequently asked questions about bankruptcy and COVID-19.
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Can I Still File for Bankruptcy?
Yes. The bankruptcy filing system remains in place. You can still file a case, even though there are currently shutdowns across the country. Our attorneys and paralegals are available by phone to handle any of your concerns. In addition to offering video and phone conferences during this time, we also have staff who can meet in person to assist with your case. You may complete signatures and other paperwork electronically.
During the shutdowns, many meetings pertaining to your case will be held over the phone or Zoom. Many court hearings for Chapter 7 and Chapter 13 cases are postponed. The court may reschedule some hearings quickly, while others may occur over the phone.
The Sader Law Firm staff is capable of handling issues that may arise during your case.
How Does the Pandemic Affect My Case?
How the pandemic affects your case depends on the circumstances. For example, the $1,200 payments you may have received as part of the stimulus package will not become part of your bankruptcy. The Trustee will not ask for payments from your stimulus money.
However, there are also implications for renters and homeowners. There is a moratorium on evictions in some counties and in other parts of the country. Additionally, many lenders have delayed mortgage payments. The federal government halted federal student loan payments until late September. How the pandemic affects your case depends on the type of debt you carry, your location, your lender, and potentially future federal and state legislation.
We encourage you to follow us on Facebook for future updates on how new legislation or events could affect your bankruptcy. You can also speak to one of our attorneys to obtain a better understanding of how you or your business could be affected.
Despite the pandemic, bankruptcy’s automatic stay remains unchanged as long as your case is active and the stay is in effect. The automatic stay prevents creditors from pursuing collection attempts while it is in effect.
Do the Deadlines in My Case Still Apply?
Yes. You should continue meeting the deadlines set by the court. This will ensure that your case moves forward without any further delays. It will also ensure that your case is not dismissed for missing a deadline. The most important deadlines for debtors to meet include:
- Filing payment deadlines
- Payment deficiency deadlines
- Course 2 certificate submission
- Any deadlines to provide the Trustee with requested documents
It is unclear how lenient the court will be to debtors during the pandemic. The court may or may not give you an extension on certain deadlines. It will depend on the circumstances of your case. Thus, it is crucial to stay on top of bankruptcy proceedings. The attorneys at The Sader Law Firm can help you stay organized and meet any important deadlines.
How Does Bankruptcy Protect Businesses?
Chapter 11 bankruptcy allows you to reorganize your business, discharge debts and protect your assets from creditors. With a Chapter 11 reorganization plan, you may get a second chance at starting your business. During the reorganization process, you can find new ways to become profitable again while keeping your most important staff on the payroll.
Can Small Businesses Benefit From Filing Chapter 11 Bankruptcy?
Further, after the coronavirus pandemic forced many small businesses to close operations, the federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Through March 26, 2021, businesses with up to $7.5 million in non-contingent, secured and unsecured debt will qualify for Subchapter V. The previous limit was $2,725,625. Thus, more small and mid-level businesses are eligible to file for bankruptcy under Subchapter V of Chapter 11.
Additional benefits for small businesses under Subchapter V include:
- Eliminating the creditor committee requirement
- Allowing the Trustee to oversee the debtor’s payments
- Allowing the debtor to spread its debt over three to five years
- Making the bankruptcy proceedings more expeditious
How Does Bankruptcy Protect Commercial Tenants?
As the coronavirus pandemic continues, many restaurants and retailers may have to turn to the bankruptcy courts for relief. The majority of them will have signed a commercial lease agreement. A tenant can file for bankruptcy under Chapter 7 or Chapter 11 of the Bankruptcy Code. The benefits for filing bankruptcy as a commercial tenant include:
- Halting most creditor actions through the imposition of an automatic stay
- The ability to reject or renegotiate a lease that no longer benefits the restaurant or retailer
- An opportunity to conduct a sale that is free of liens and claims and exempt from transfer taxes
- The possibility of debtor-in-possession financing that allows the restaurant or retailer to continue operating.
Commercial tenants should consult with a bankruptcy attorney to determine the best approach for their particular situation. Many courts are eager to help businesses during the coronavirus pandemic. Thus, retail and restaurant owners should take advantage of the creative options available to them when pursuing commercial tenant bankruptcy.
How Does Bankruptcy Protect Consumers?
Bankruptcy has a bad reputation in the U.S. for the wrong reasons. Many people assume that bankruptcy is for those with nothing to lose. This assumption could not be further from the truth. Bankruptcy is for people who have assets they want to protect.
An automatic stay goes into effect when you file for bankruptcy. The automatic stay prevents most creditor collection actions, including property seizure and wage garnishments. Creditors can suffer consequences for attempting to collect payments or seize property while an automatic stay is in effect. You could use bankruptcy’s automatic stay to prevent a creditor from foreclosing on your home or seizing a vehicle. The automatic stay can prevent wage garnishments, allowing you to keep money that you need to pay important bills.
Chapter 7 and Chapter 13 bankruptcy allow you to discharge cumbersome debts while protecting your most important assets. By discharging your debts in bankruptcy, it becomes much easier to rebuild your finances.
If you want to file Chapter 13 bankruptcy, our firm offers $0 up-front filing options.
Do I Still Have to Make Chapter 13 Payments?
The courts continue to require payments to be made timely unless an application is filed requesting a suspension or lowering of payments. Generally, these requests are being granted if due to COVID-19 related issues. Missed payments will need to be made up at some point, and to help with that as part of the actions by Congress and the President in response to Covid-19, Chapter 13 plans which had already been confirmed can now be extended for two additional years to help debtors make the required payments.
Further, Chapter 13 Trustees have implemented some new ways to assist debtors during the coronavirus pandemic. This includes allowing debtors to change from wage orders to direct pay. Doing so will let debtors determine how much they can afford to pay into their plans. Also, there are now procedures to allow Trustees to temporarily stop mortgage payments under certain circumstances.
How Do I File an Individual Request to Stop Payments?
There are now court procedures in place to suspend monthly payments and lengthen plans. Our attorneys have a commitment to providing quality representation to our clients throughout the bankruptcy process. Thus, if you are seeking to file an individual request to stop payments, then we can help.
How Will the Pandemic Affect My 341 Meeting of Creditors?
The U.S. Trustee Program requires that all in-person 341 meetings scheduled through July 10, 2020 occur telephonically or through alternative means not requiring an in-person appearance. Your Trustee should reach out to you with specific instructions regarding your 341 meeting.
Contact Our Kansas City Bankruptcy Attorneys
Are you concerned about how the novel coronavirus could affect your bankruptcy case? If so, then our Kansas City bankruptcy attorneys can help. We are familiar with bankruptcy courts throughout the states of Kansas and Missouri. In addition, we stay up-to-date on the latest
developments concerning COVID-19 and the bankruptcy system.
For a consultation, give us a call at (816) 281-6349, or send us a message online. An experienced attorney will answer any of your bankruptcy-related questions.