Bankruptcy Law, Coronavirus, COVID-19

Bankruptcy and the Coronavirus: Help for Florida Small Businesses

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The coronavirus (COVID-19) pandemic has been hard on businesses. During the shutdown, countless South Florida businesses were forced to shutter or adjust to a new normal, bringing in significantly less income than before. Many of these business owners have also been compelled to make some tough decisions, including the decision on whether to proceed with bankruptcy.

Bankruptcy can be beneficial for businesses that are struggling during this difficult time. The bankruptcy framework and the automatic stay that occurs immediately upon filing for bankruptcy offers relief that individuals and business owners desperately need.

Bankruptcy Law

Bankruptcy Explained: The Qualifications and How to File

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Filing for bankruptcy can be an emotional and sometimes stressful process. However, enlisting the help of an experienced bankruptcy attorney can make the process painless and worry-free.  Many clients have little understanding about what is involved when they file for bankruptcy.  Bankruptcy is a legal proceeding where a judge and bankruptcy trustee review the financial situation of individuals or businesses who are not able to pay their financial obligations and discharge qualifying debts that they are no longer able to pay.

The Purpose of Bankruptcy

Bankruptcy is meant to give an individual a fresh financial start, allowing that person to wipe the slate clean. It also serves as a way to give the filer some sense of relief through the protection of the automatic stay, which means creditors are prohibited from continuing collection actions against the filer. This allows the person time to regroup, protect valuable assets and work with the bankruptcy trustee to eliminate their debts.

Coronavirus, COVID-19, student loan debt

Tips for Keeping Student Loan Debt Under Control During Covid-19

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Student loan debt was already a financial burden for many Americans, but the COVID-19 crisis has made it worse. It helps to understand what options are available for borrowers who are struggling to keep up with their student loan debt during this time of crisis.   

Federal Assistance and Forbearance

In March 2020, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act in light of the growing pandemic. The CARES Act includes certain provisions that lighten the burden carried by student loan borrowers. As of March 13, 2020, most federal student loans were put on administrative forbearance which means no payments were due, beginning March 13, 2020 and ending September 30, 2020.

Coronavirus, COVID-19, Credit Card Debt, Debt Relief

Nearly Half of U.S. Adults Now Carrying Credit Card Debt Amid Pandemic

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Credit card debt has dramatically increased since the coronavirus (COVID-19) pandemic, according to recent data from CreditCards.com. Their data reports that 120 million U.S. consumers, or 47 percent of all consumers, had credit card debt as of April 2020, which is a 43 percent increase from March.

Millennials were hit the hardest with 34 percent of them reporting that they used credit regularly. Experian, one of the three main credit reporting agencies, reported in March that U.S. consumer debt reached a staggering $14.1 trillion with credit cards making up $829 billion of this debt. This level is the highest seen since the Great Recession.

Bankruptcy Law, Coronavirus, COVID-19, Debt Relief

How Has the Coronavirus Affected Bankruptcy Filings?

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Even though unemployment filings have skyrocketed, and countless businesses have been struggling during the coronavirus pandemic, bankruptcy courts have not been flooded with new cases- yet.

When compared to bankruptcy filings in April 2019, there were 47 percent fewer consumer bankruptcy filings in April 2020, according to the American Bankruptcy Institute (ABI).

Bankruptcy Law

New Bankruptcy Law Takes Effect Benefiting Small Businesses

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For the most part, business bankruptcy, also known as Chapter 11 Bankruptcy, has not been a viable option for most struggling small businesses. The process can be long and complicated, and the costs associated with filing under Chapter 11 of the U.S. Bankruptcy Code have kept most small businesses out of this option, leaving them to either pursue a personal bankruptcy under Chapter 7 or Chapter 13 or to close their doors completely. However, the Small Business Reorganization Act (SBRA), which officially took effect two months ago, has taken away some of these barriers, opening the possibilities for Chapter 11 filings for small businesses.

Originally, the SBRA applied only to businesses or sole proprietors with less than $2.7 million in debt. However, when the coronavirus (COVID-19) crisis hit in March, Congress temporarily increased this debt cap to $7.5 million in debt, opening the doors to many more businesses to take advantage of the SBRA.

Coronavirus, COVID-19, Credit Card Debt, Debt Relief

Simplified Rules for Paying Down Debt

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When it comes to paying down debt, the process can seem daunting if not impossible. During COVID-19, many Americans are being forced to take a different approach when it comes to their finances. With the uncertainty of how long this pandemic will last and how it will affect the nation’s economy, many are concerned how to manage their existing debt while trying not to incur new debt.

One good rule of thumb is to look at the debt that is costing you the most in the long run. How is this “cost” determined? The interest rate on the debt is often a good predictor of whether a debt will end up taking longer to pay off and will end up costing someone more when the debt is eventually paid in full.

Bankruptcy Law, Coronavirus, COVID-19, Debt Relief

Coronavirus and the Changes it has had to the U.S. Bankruptcy Code

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The coronavirus pandemic has affected our country in so many ways. It has also affected the U.S. Bankruptcy Code, specifically through the recently passed $2.2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES Act).

Within the CARES Act were revisions to parts of the U.S. Bankruptcy Code, meant to help small businesses and consumers during this difficult time. The CARES Act amended the Small Business Reorganization Act of 2019 (SBRA), which temporarily increased the debt threshold for filing for Chapter 11 Bankruptcy relief. The debt threshold increased from $2,725,625 to $7,500,000. After one year, the threshold will go back down to the original amount.

Coronavirus, COVID-19, Debt Relief

5 Ways to Protect Your Stimulus Check from Creditors

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As Americans begin receiving their stimulus checks from the $2.2 trillion CARES Act, many who are struggling with debt, worry this money will be intercepted by creditors seeking payment. More than 80 million stimulus checks have been processed thus far, which is a huge source of relief for the 20 million Americans out of work.

Many creditors view these stimulus payments as a chance to receive payment on outstanding debt, especially those that have already been reduced to court judgments. If a financial institution is given a garnishment order, it is possible they will immediately freeze that amount of money deposited into the account, only providing the consumer a limited amount of time before the funds are taken by the creditor.  However, certain measures can be taken to protect this stimulus money from creditors.

Credit Card Debt, Debt Collection, Debt Relief

What Happens to Unpaid Debt When A Person Dies?

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Given the amount of debt consumers carry during their lifetime, it comes as no surprise that for many people this debt will remain unpaid after death.  What happens to that debt when the person who was originally responsible for the debt passes away?

Ultimately, how that debt is handled depends largely on the type of debt owed. After someone dies, anything that person owned at the time of his or her death and anything he or she owed is all a part of the deceased individual’s estate.  Essentially everyone has some type of debt when they die, even if it is just payment for funeral and last medical expenses. All this debt will need to be handled in the person’s estate by the personal representative, either appointed in a Last Will and Testament or appointed by the probate court.