Bankruptcy is often considered an option of last resort. And why not? The great majority of us want to repay our debts and enjoy financial stability and freedom. However, we all sit prey to the unexpected, whether in the form of an unexpected illness, a job layoff, or even a global pandemic. These are circumstances which often force well-intentioned, hard-working people to turn to an option of last resort. Now, when many employers have laid off workers because of the restrictions created by the coronavirus, bankruptcy may be a viable option.
At this time, as the fall of 2020 approaches, a plan to file bankruptcy may provide a sense of control during turbulent, unpredictable times while providing the necessary time to regroup and reorganize financially.
The loss of a job due to a layoff represents the loss of important income crucial to paying a mortgage or rent payment as well as purchasing necessary items such as food, fuel, and clothing. Regardless of how someone may try to modify their budget to accommodate a reduction of income, inevitably a pile of unpaid debt accumulates.
While the work of local, state, and federal governments, and even some creditors, is ongoing to provide relief for consumers during the COVID-19 pandemic, the availability of future stimulus payments and unemployment benefits is uncertain
Although any type of stimulus in the form of cash is helpful, it is only useful in the short term, and will not permanently solve unemployment problems. Filing for bankruptcy may be inevitable if there is no clear financial path available to withstand the loss of a job caused by the coronavirus. If bankruptcy is inevitable, the sooner the case is filed, the faster a consumer may begin to rebuild credit.
Unemployed debtors must use the means test to determine whether they qualify for a Chapter 7 bankruptcy case filing. A prospective debtor’s income must be at or below the median income for Utah to be eligible for a Chapter 7 discharge. However, if gross income is too high, a prospective filer may deduct certain qualifying expenses to establish eligibility to file a Chapter 7 case.
Timing is crucial. Each month with reduced income makes it easier to qualify under the means test. Those who have been unemployed for more than a month should find it easier to qualify. Contact an experienced bankruptcy attorney to learn more.
Most debt collectors assume that consumers are unaware of their rights and protections under federal law. However, Theron Morrison cares about protecting your rights. Theron Morrison has the necessary experience to ensure that all consumers receive the full benefit of the protections afforded them by federal law. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.