Bankruptcy Law

Knowing When to File for Bankruptcy

Making the decision to file for bankruptcy is never an easy one. Many times, it can be difficult to know when the time is right or when it is better to wait.  

A bankruptcy case allows a consumer to receive a much-needed financial fresh start by discharging his or her outstanding consumer debts. The types of debts that are discharged in a bankruptcy case include credit card debt, mortgages, car loans, medical debt, and other unsecured loans.  

If the consumer is facing collection actions for any unpaid debts, bankruptcy could be ideal in terms of stopping the lawsuit from proceeding. With the start of a bankruptcy case, the court issues an automatic stay, which is a court order requiring all collection activity to cease, including collection lawsuits. This stay allows the consumer to have a chance to breathe and regroup, including working with the bankruptcy trustee on handling the outstanding debt.  

This automatic stay can also prevent any eviction or foreclosure proceedings from moving forward. While the bankruptcy does not necessarily mean the person can prevent the foreclosure from happening completely, it does pause the proceeding temporarily for the duration of the bankruptcy case.  

The bankruptcy’s automatic stay will also stop any wage garnishment proceedings, as well, which will also give the consumer a brief reprieve.  

For the most part, Florida’s bankruptcy exemptions will allow the consumer to keep a large portion of his or her property.

Another excellent cue in terms of when to file for bankruptcy has to do with the number of debts the consumer has and his or her ability to pay them in the near future. Many of the debts that plague bankruptcy filers, including credit cards and personal lines of credit are opened-ended with no end date in sight. If the consumer does not realistically see himself or herself paying this debt down in five years, it may be wise to consider proceeding with bankruptcy. 

 A qualified bankruptcy attorney can offer guidance and answer any questions the person may have about whether it is time to move forward and proceed with a bankruptcy filing. A bankruptcy attorney can also assist in determining which type of bankruptcy is best.  

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Bankruptcy Law

What is a ‘No Asset’ Chapter 7 Bankruptcy Case?

In a no-asset Chapter 7 bankruptcy case, the person filing for bankruptcy keeps all of their property because it falls within the exemptions provided under federal law or the law in their state.

With a Chapter 7 liquidation bankruptcy, a filer surrenders their assets to the bankruptcy estate, which uses them to pay off creditors. But in reality, this is only true of non-exempt property. Many of our cases, are in fact, ‘no asset’ cases. Bankruptcy law recognizes that filers need to retain some property so they can survive the process with something on which to build a future after bankruptcy.

Florida’s bankruptcy exemptions can be used to protect essential assets. Some of these exemptions, apply to a specific asset, such as a home or a car. Other exemptions are known as ‘wildcard exemptions’ and can be applied to any type of personal property that has a certain value.

There are occasions where the bankruptcy trustee will choose to abandon certain non-exempt property. For instance, if the filer has a vehicle with a loan on it that is almost as much as the car’s worth, the trustee may not see it as worthwhile to liquidate the asset and may choose to abandon it instead.  In this situation, even though technically the filer has property to sell, the case may still be declared a “no asset” case.  

Florida has one of the most generous homestead exemptions in the country. To use Florida’s exemptions, you must have resided in Florida for at least 730 days before filing your bankruptcy petition. To claim the full value of the homestead exemption in Florida, you must have owned the property for at least 1,215 days before the bankruptcy filing.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Bankruptcy Law

The Pre-Bankruptcy Credit Counseling Requirement and What Filers Need to Know

All bankruptcy filers are required to take and complete two educational courses before receiving a final bankruptcy discharge. These courses are required for both Chapter 7 and Chapter 13 filers. It is important that individuals considering bankruptcy be aware of these requirements for their cases to be successful.  

At the start of a bankruptcy case, the individual filing must meet certain requirements. The filer must disclose his or her complete financial picture by submitting required bankruptcy financial declarations. He or she must also pay a filing fee, request a fee waiver, or request an installment payment for the fee. Lastly, the individual must submit proof that he or she received credit counseling from an agency approved by the U.S. Trustee’s office. This proof of completion must show that the course was taken within 180 days prior to filing.

Pre-bankruptcy credit counseling helps determine whether bankruptcy is necessary. Granted, bankruptcy law only requires the consumer to participate in the counseling program. This participation does not mean the person has to do everything recommended to him or her. However, if the credit counseling agency prepares a debt repayment plan for the consumer, and the bankruptcy court views the repayment plan as something the filer could feasibly do, they may use this repayment plan in an effort to push the person from proceeding with a Chapter 7 bankruptcy case to filing a Chapter 13 case.  

A list of approved credit counseling courses and agencies can be found on the U.S. Trustee’s website. These agencies can charge a reasonable fee for their services, but if the filer is not able to pay the fee and falls below a certain income threshold, the agency must either provide the services for a reduced rate or for free. 

The second credit counseling required by bankruptcy courts is called debtor education. This course must be completed after filing for bankruptcy. The purpose of this second course is to give the filer resources and tools to help him or her create a budget, rebuild his or her credit after bankruptcy, and avoid falling into the same situation again.  Proof of completion must be provided by the filer within 60 days of date first set for the case’s meeting of creditors 

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Bankruptcy Law

Which Type of Bankruptcy Should I File to Keep My Home?

One of the biggest fears people have when filing for bankruptcy is losing their home, car, and other important assets. However, with Florida bankruptcy exemptions and depending on the type of bankruptcy being filed, it is possible for consumers to keep their home and other property. It ultimately depends on the filer’s financial circumstances.  

Protecting Home Equity  

How much equity the filer has in his or her home plays a big part in whether he or she can keep it Equity plays an important part in both Chapter 7 and Chapter 13 bankruptcies. The equity a person has in his or her home is protected through the state’s homestead exemption, and fortunately for Florida filers, the state’s homestead exemption is quite generous.  

While many states limit how much equity the filer can exempt in the bankruptcy case, Florida bankruptcy courts allow the filer to claim all the equity so long as certain circumstances are met, including:  

  1. The filer has owned the property for the last 1,215 days prior to filing; and 
  1. The property is not larger than ½ an acre in the city or 160 acres in rural areas.

The person’s ability to catch up on missed payments while staying current on future payments plays a key role in whether he or she can keep the home.  

Chapter 7 Bankruptcy  

Many filers prefer to file for Chapter 7 bankruptcy because the entire process can be completed in a matter of months, as compared to three- to five- years, a Chapter 13 bankruptcy requires.  

Under a Chapter 7 case, the filer can keep his or her home so long as he or she is current on the mortgage payments and can continue making those payments in the future. The problem is many times the individual is already well behind on his or her mortgage payments by the time he or she files for bankruptcy. Given the short amount of time a Chapter 7 bankruptcy takes, it is not always feasible for the consumer to catch up on missed payments within a few months.   

Chapter 13 Bankruptcy 

A Chapter 13 bankruptcy case may be the better choice to allow the individual to catch up on missed payments over the course of the repayment period. A Chapter 13 bankruptcy case requires the consumer to work closely with the bankruptcy trustee to create a realistic repayment plan to pay back all creditors over three to five years, including the filer’s mortgage lenders.  Depending on how far behind the filer is on his or her mortgage payments, it is completely possible to catch up on what was owed while staying current on the mortgage. So long as the filer is keeping up with the repayment plan, the mortgage holder cannot foreclose on the property during the bankruptcy case.  

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

student loan debt, Student Loans

Debt Cancellation for Disabled Borrowers Reinstated by the Department of Education

The U.S. Department of Education announced recently that they will cancel federal student loan debt for borrowers who are no longer able to work due to disabilities. This announcement affects tens of thousands of borrowers currently paying on outstanding federal student loan balances.   

Student loan advocates say that this small step is the first of many to help reform the student lending system, including opening debt forgiveness to groups who are legally entitled to receive it but have not yet received debt forgiveness.  

According to an investigation conducted by NPR, 28 percent of eligible student loan borrowers have either had their loans completely erased or are on track to be erased through the “Total and Permanent Disability Discharge” program. This number is alarmingly low. According to the Department of Education, more than 41,000 borrowers have permanent disabilities. These 41,000 borrowers owe a collective $1.3 billion in student loan debts that would otherwise be eligible for discharge.  

Many of these disabled borrowers had previously had their loans erased. However, once the COVID-19 pandemic hit, they struggled to submit required income-monitoring documentation, resulting in these loans being restored. The Department of Education announced that borrowers who are currently required to submit income-monitoring information will not have to do this for the duration of the COVID-19 pandemic. Waiving this requirement will help ensure that borrowers who are totally and permanently disabled will not be hurt by their inability to submit required paperwork during this health crisis.  

For several decades, federal law has made it possible for borrowers who are no longer able to work and earn an income to support themselves due to a severe and permanent disability to receive relief from their student loan debt. While the goals behind the law are admirable, the execution has left much to be desired. Between March 2016 and September 2019, NPR reported that only 28 percent of those eligible for debt forgiveness actually received it.  

NPR also reported that of the 365,000 borrowers who are eligible for this relief, 225,000 had defaulted on their student loan obligations.  

Many argue that the problem with the system has to do with the fact that disabled borrowers have the actively seek out the loan forgiveness. The requirements placed on these borrowers to respond to eligibility notices and report their income qualifications have left many of them to fall through the cracks. Requiring someone who is already struggling with a debilitating disability, such as chronic memory loss or other illness, to keep up with required paperwork places a substantial burden on these individuals.  

NPR also reported that in 2019, tens of thousands of borrowers asked for assistance, had their student loans conditionally discharged, and then had them reinstated due to the failure to keep up with the annual paperwork. Critics argue that this paperwork requirement forces the borrowers to do too much just to prove that they are not able to work. In fact, income-monitoring has consistently been a problem for many disabled borrowers. 

Representatives from the Department of Education say that they hope this change will alleviate some of that pressure, at least temporarily.  Student loan reform advocates believe that this change needs to be a permanent one, at least when it comes to requiring permanently disabled borrowers to continually provide proof of their inability to work.  

Please click here to read more.  

For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com. 

student loan debt, Student Loans

Student Debt Cancellation Bill Scheduled to be Signed into Law this Week

Congress has passed a $1.9 trillion stimulus package that includes important provisions concerning student loan cancellation, as well as increased federal regulations on for-profit colleges.   

Several different objectives were met by Congressional leaders through the passing of this legislation. One of the biggest goals was to address the tax burden that student loan borrowers face when receiving any portion of their student loan debt forgiven. Up until now, whenever a borrower received forgiveness for any portion of his or her student loan debt, the amount that was forgiven was considered taxable income. Under this legislation, tax forgiveness will be treated as tax free for the next several years.  

The tax relief portion of the bill is good through January 2026. Lawmakers believe that this is a good first step in cancelling the estimated $1.5 trillion in federal student loans currently held by nearly 45 million American consumers. 

Essentially, these measures are seen as a good first step in accomplishing the goal set by President Biden to cancel $50,000 in student loan debt for all borrowers. Without this tax-free benefit, financial analysts were concerned as to how this forgiven amount would be treated for tax purposes.  

Additional financing from the legislation will be distributed directly to both public and private institutions. Colleges and universities that receive these funds are required to spend at least of what is disbursed on emergency grants to students.  

Another provision in the relief bill includes a measure closing the 90-10 loophole which governs how GI Bill money is counted by public and private institutions. For years, for-profit schools have been criticized for how they have recruited both active military service members and veterans. Colleges and universities are currently required to receive in at least 10 percent of their revenue from sources other than the federal government. If the institution is not able to meet that requirement, they are barred from receiving some of the $100 billion the federal government issues annually in student aid. 

For-profit institutions were taking advantage of a loophole that would otherwise allow them to count money received from service members and veterans as part of that 10 percent and not part of federal funding. Advocates have argued that this loophole caused for-profit institutions to aggressively recruit military service members and veterans in an effort to meet the requirement. As many of these for-profit institutions have ended up shuttering and leaving their students high and dry with no diploma and out money, this included these same service members and veterans who they actively recruited.  

Under this new legislation, GI Bill dollars will now be counted as federal money. Due to the pushback lawmakers received from conservative lawmakers, a bipartisan amendment was made to the bill, changing the date for when GI Bill dollars will be counted as federal money to October. Additionally, this change will not occur until the institutions’ 2023 fiscal year. 

Controversy aside, this legislation is being heralded as the largest federal effort made thus far to help both students and families who are struggling during this pandemic due to reduced wages and/or lost jobs. Further, the funds will assist colleges and universities who are facing their own struggles, seeing higher expenses and a sharp decline in revenues as a result of the COVID-19 pandemic.   

Please click here to read more.  

For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com. 

Debt Relief

Credit Counseling vs. Bankruptcy- Which one is right for you?

When it comes to dealing with debt, you have options.  Debt relief can ease the burden of overwhelming debt, but it’s not right for everyone. Given a person’s financial and personal circumstances, certain considerations should be kept in mind when making the determination between credit counseling and bankruptcy.

If the consumer has a steady income and can pay back his or her debt within a few months to a year, credit counseling may be the wise choice for him or her. However, if the person has an overwhelming amount of debt in comparison to his or her income, filing for Chapter 7 or Chapter 13 bankruptcy may be the better option.  

Credit counseling involves consumer education from a certified credit counselor regarding a variety of topics, including improving a credit score, managing money, preparing, and sticking to a budget, and improving the person’s credit score. The goal is to educate the consumer and prepare him or her to handle his or her finances independently to avoid the need to file for bankruptcy.  

Credit counselors can be found through the assistance of the consumer’s bank or credit union, as well as a consumer protection agency. It is extremely important that the consumer does his or her research before selecting a credit counseling agency. The National Foundation for Credit Counseling (NFCC) can also be an excellent resource for finding credible nonprofit credit counseling agencies.

This type of credit counseling should not be confused with the credit counseling that is required when filing for bankruptcy. Bankruptcy courts require filers to receive debt and credit-related financial counseling at least 180 days before filing for bankruptcy. 

A legitimate nonprofit credit counseling agency should offer free credit counseling services and should not charge a fee upfront before offering these services. These free consultations normally last up to an hour and should provide long-term solutions for the consumer on how to handle his or her debt. 

Unfortunately, credit counseling scams do exist. It is important that the consumer does his or her research to ensure that the agency selected is not one of them. Never provide personal or financial information to the agency until the consumer is sure the credit counseling agency is legitimate.  Research the company with the Better Business Bureau to see if any scams have been reported.

It is equally as important that the consumer realize when enough is enough and when bankruptcy is the better course of action. Many times, the financial burden becomes too much to handle through counseling along. At this point, it may be wise to move forward towards formally filing for bankruptcy. Before making this decision, the consumer should consult an experienced bankruptcy attorney and talk to him or her about the situation. An experienced bankruptcy attorney will be able to help the individual make the decision of whether to pursue credit counseling first or file for bankruptcy. Additionally, the attorney will be able to guide the person as to which form of bankruptcy, Chapter 7 or Chapter 13, would be best.

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Credit Card Debt, Debt Relief

The Best Way to Conquer Credit Card Debt

Many consumers find themselves still struggling with large amounts of credit card debt. Much of this credit card debt is carried over from previous years. Certain steps can be taken to tackle credit card debt and either pay it off in full or reduce the amount owed to a more reasonable number.   

The first step is to push the pause button on spending and inventory the situation. The consumer’s debt cannot be conquered until the spending stops. It is important to review what has been purchased the past few months, determining how much has been spent and what is owed. It also helps to write down what the interest rate is for each card, noting the balance owed and the minimum monthly payment. Taking this first step will allow the consumer to be able to put together a budget and a plan to pay off the debt over time.  

Once the consumer has a chance to review his or her debt situation, the next step is to select a strategy to pay down the debt. Two of the most common methods include the snowball method and the avalanche method.  

With the snowball method, the consumer arranges his or her credit card balances from smallest to largest balances. The consumer focuses his or her attention on the card with the smallest balance first, paying down as much as possible on that card while continuing to make the minimum monthly payments on the other cards. Once the first card is paid in full, the consumer focuses on the card with the next smallest balance until all cards are paid off in full. The snowball method requires a great deal of patience and discipline, but it can be an effective way to pay down debt. However, this method does involve paying more in interest over time since credit cards with higher balances tend to have higher interest rates. 

The avalanche method works similarly to the snowball method, but the consumer focuses on the credit card with the highest interest rate first. This method allows the consumer to get out of debt quicker than the snowball method since it focuses on the larger balances with the higher interest rates first, but it can be hard to stay motivated with this method since seeing the results of the consumer’s efforts can be harder to immediately see. 

Another method to pay down credit card debt involves consolidating the debt through a personal loan or balance transfer.  Many credit card companies offer balance transfers, allowing the consumer to transfer multiple credit card balances to one card with a zero or low introductory interest rates. It is important that the consumer pay the balance down before that promotional period expires, however. Otherwise, the interest rate can skyrocket at the end of the promotional period, leaving the consumer in a worse position than before. A personal loan can also be used to pay off all the consumer’s credit card balances. This method allows the consumer to focus his or her attention on one, fixed monthly payment over time in lieu of multiple credit card payments.      

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

COVID-19, student loan debt

New PPP Loan Rules Make It Easier for Student Loan Borrowers to Obtain Funds

New rules with respect to who can receive financial assistance through the Paycheck Protection Program (PPP) will open the door for struggling student loan borrowers who have previously been unable to qualify for the PPP loan program. These new regulations took effect on March 1, 2021.  

The funds received through the PPP were meant to offer financial assistance to struggling businesses, allowing them to stay in operation during the COVID-19 pandemic. For the most part, these loans are forgiven later. Previously, any business that was owned 20 percent or more by an individual who had defaulted on his or her student loan payments was considered ineligible for PPP loan assistance. This rule clearly shut out a large group of individuals and businesses who arguably could use the governmental assistance.  

The Biden administration has changed this rule, effective March 1, 2021. A default or delinquency on student loan payments will not automatically disqualify a PPP loan applicant. This change comes along with several others, including priority access for businesses employing 20 or fewer individuals.  

Over the past several years, student loan debt has surpassed credit card and auto debt with over 42 million Americans carrying some amount of student loan debt. Of this number, approximately one-third of them are in either delinquency or default on these loans.  

According to a report by the Center for Responsible Lending, a large number of these borrowers are self-employed. Approximately 800,000 self-employed Americans are reportedly behind on their student loan payments. Additionally, 500,000 minorities have also be excluded from PPP assistance due to the status of their student loans.   Student loan reform advocates have praised this change, saying that small business owners have been bearing the brunt of the financial struggles suffered during the COVID pandemic.

Please click here to read more.  

For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com. 

Business Bankruptcy, COVID-19

Wave of COVID-19 Bankruptcies Hitting U.S. Bankruptcy Courts

As the country nears the one-year mark since the start of the COVID-19 pandemic, the financial effects are continuing to have effect on consumers and small businesses. The pandemic forced the shutdown of countless businesses throughout the country, and the expected wave of impending Chapter 11 bankruptcy cases is only now beginning to hit the nation’s legal system.  

According to court records, the number of Chapter 11 bankruptcy filings were up by approximately 20 percent, when compared to filings in 2019. These numbers are only expected to grow. 

Certain sectors of the economy have been hit much harder than others. According to figures from New Generation Research, restaurants, retailers, entertainment companies, and real estate firms have filed for bankruptcy protection more now than in previous years. The number of bankruptcy filings made by entertainment companies quadrupled in 2020 alone. The number of filings has tripled for oil and gas companies, while doubling for restaurant owners, retailers, and real estate companies. 

Thus far, more than $3.7 trillion in federal stimulus money has been issued in an effort to help offset the damage caused by the COVID-19 pandemic. Even with this money and the possibility of more coming in the future, many businesses have not been able to survive.  

The true effects of the pandemic may not be seen for several years. After the Great Recession of 2007, the bankruptcies that resulted were not filed until 2010, a few years after the start of the recession 

The widespread shutdowns brought on by COVID-19 have hit the restaurant industry hard, and financial experts worry that they may be the hardest hit from the financial crisis. The route these businesses will take can vary depending on what the businesses owners have decided to do. Many of them have already made the decision to close down completely in lieu of pursuing a business bankruptcy. Others have chosen to file for Chapter 7 bankruptcy, meaning that their assets will be liquidated and used to pay down the debts, leaving the restaurants permanently closed. 

With so many people working from home, the need for office space has also dropped off dramatically, leading to a drop in real estate values for both retail and office spaces, hitting the real estate sector, as well. 

Some of the larger chain retailers who have filed for Chapter 11 bankruptcy over the summer of 2021 include J. Crew, Neiman Marcus, J.C. Penney, Brooks Brothers, and Lord and Taylor. According to S&P Global, there was an average of two corporate bankruptcy filings per day in the months of June and July.       

Not only have retailers been hit hard but their suppliers have, as well. An example of this is Country Fresh, a supplier of fresh fruit snacks, sides, soups, and salads to convenience stores, filed for Chapter 11 bankruptcy mid-February 2021. This filing represents just one of the many suppliers who have been hit hard and are still struggling from the pandemic. It remains to be seen whether more filings will follow as 2021 progresses.   

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.