Bankruptcy in the Time of Coronavirus: the COVID-19 Impact

Times are tough right now. Record numbers of folks find themselves without a job, but not without daily expenses. And for some of them, times were hard before the novel coronavirus disease came along. For those who were in the midst of a bankruptcy proceeding or who now see bankruptcy as their only way forward, questions about how COVID-19 will change the immediate future could loom large. Please know that in these stressful times, the attorneys and advisers at Hausen Law, LLC are your allies. And today we are here to shed some light on the situation.

Where Things Stand

Does the widespread shut down or switch to remote working mean that if your bankruptcy filing was underway, it’s stalled for the time being? No––as of right now, bankruptcies are still being filed. But one thing definitely on hold is any in-person appointment. Arrangements can vary by state but in Northern Ohio, “all courthouses in the district are closed to the public” currently. Some locations may even temporarily close their physical offices. If they are open, they could be operating with a skeleton crew, only granting employees and officials access.

Because of the high rate of infection from coronavirus and the crackdown on person-to-person contact, typical procedural steps that were always done in person may now be handled in other ways. For instance, some courts are temporarily waiving the need for a live signature on a bankruptcy petition. Instead, attorneys and clients can review forms virtually before submitting. Check with your respective court to see if this is true in your area. And read our article on virtual court hearings.

Setting Expectations

What we can say for sure is that until we’re beyond this crisis, you should expect delays. It’s a given that with everyone’s lives in upheaval right now, you’ll need to relax your timing expectations. So if you’ve decided to file by mail, be aware that things could take longer than anticipated. If your filing is already in progress, you should still be staying on top of deadlines and time-sensitive notifications via email or phone. Courts will continue to follow standard procedures, notifying all parties of any changes.

Keeping up with adjustments to 341 hearings is especially vital, as is staying in touch with your trustee. At this time it’s most likely that meetings will either be rescheduled, held over the phone, or conducted using a video conferencing platform. To be sure of your local situation, give the trustee a call to inquire.

Even as we say this, we know that the virus will continue to spread for a time, and that this advice could very well be eclipsed by new guidance. The situation is in flux and it’s up to each claimant to keep in touch and stay up to date.

Handling Payments

With so many businesses suspending operations for the foreseeable future and workers taking a big hit in their wallets, some could find themselves unable to meet their bankruptcy payments. But just skipping out on payment is never a good idea and can jeopardize your filing. If you’re at an impasse and just can’t afford a bankruptcy payment, now is the time to reach out to your attorney if you have one or to your trustee if you are pro se. There are options available to rethink your payments, but you’ll need their advice and involvement.

This situation, like the virus, is new and uncharted. Staying informed, involved, and connected is the best way to ensure that your filing goes as smoothly as possible.

Outlying Possibilities

Here’s a bit of good news: some large healthcare insurers have stepped up and vowed that patients who contract coronavirus will not need to worry about out-of-pocket costs for their care. While this is a welcome relief to policy-holders, the insurance world is a complicated scene. Care and treatment could easily include an out-of-network facility or care provider. This happens often, and a patient who is gravely ill won’t be in the position to research coverage eligibility––unexpected medical costs could still threaten a patient’s financial security.

We hope that you’re coping well and staying safe and healthy. But if you find yourself ill and end up needing medical treatment, unexpected bills could surface. And if you have a prolonged recovery, savings could be expended. These awful situations could be made worse if a job loss leaves you without insurance coverage. If this worst-case scenario becomes your reality, know that bankruptcy is an option.

Moving Forward

Some creditors and organizations you pay monthly could be lenient during this critical time. And because of new legislation, your circumstances may enable you to petition for even more help. So if you’re beginning to fall behind on payments––mortgage, taxes, utilities, loans, etc.––get in touch with your respective lenders and providers and see if they’re willing to work with you.

That said, not everyone can expect that lenders will be flexible. And we certainly don’t advise you to simply stop making payments. So if a creditor is threatening to repossess or file a suit and you’re reaching a financial breaking point, consider reaching out to a professional like Hausen Law, LLC. Filing for bankruptcy will put an immediate stop to the threats and allow you to take control of your debts.

This Too Shall Pass

These are stressful times. Every American’s wealth and health are on the line. Just know that you aren’t alone––millions of us are in this together. As we continue the fight and look to round the bend to wellness, know that help is out there. And if you find yourself in a compromised financial state, bankruptcy is a sound option. But you’ll want to be sure that you’re working with honest, knowledgeable professionals. At Hausen Law, LLC, we stick by our clients and offer expert advice for the best course forward.

We wish you the very best during this tumultuous time and hope that once this crisis has quieted, you will reach out for needed help––we’ll be here.