Shelter-in-place, COVID-19, pandemic, telecommuting . . . these are terms we, as a nation, are inundated with each and every day. The current state of life as we know it is constantly debated, and it seems nothing else can truly break us out of the intense focus trained on the present. But what is to come in the months ahead? The potential consequences for social distancing and furloughed or terminated employment must join these topics for discussion. With the number of Americans filing for unemployment sky-rocketing, the knowledge of just how to handle a personal financial crisis is of the highest importance.
The first thing to note is the option to file for bankruptcy should be a last resort. This is not because of any stigma attached to the filing but because relief opportunities are prevalent during this pandemic. Look first to your ability to make the minimum payments on all of your bills and stay current for as long as possible. If this plan of optimistically hoping to tough out the current season seems out of reach, turn next to working out settlement plans with your lenders. Congress’s latest $2 trillion CARES relief package allows homeowners to take advantage of a 180-day forbearance on their mortgage payments, while also preventing foreclosure on federally backed loans. As for credit card, student loan, and auto loan payments, numerous larger banks are offering assistance to borrowers struggling to make payments. The imperative thing is to begin to take action first. Do not wait to automatically be enrolled in a relief program; call each lender and make note of the content of your conversation, the representative with which you spoke, and the offer extended for each interaction. By being proactive, you may be able to avoid filing for bankruptcy.
If the settlement or relief program options are still insufficient, then you should next consider filing for bankruptcy. There are two types: Chapter 7 and Chapter 13. Each has a different process and filing fee. Chapter 7 proceedings are advisable for borrowers with a larger amount of debt which cannot reasonably be paid off, or even a significant portion which cannot be paid off. In these proceedings, assets of the borrower are sold off to pay the debt owed. Assets sold include second cars, vacation homes, stocks, collections and bonds. The general goal of this process is to completely eliminate the borrower’s debt. A judge has to approve the borrower’s filing in court, which costs from anywhere between $300 to $350 to file and $1,500 to $2,000 in legal fees, and the entirety of the process usually lasts three to five months. While in Chapter 13 proceedings, the goal is to make debt more manageable by forming a consolidated repayment plan, approved by the court. This process does not sell assets but instead reorganizes debt to make the borrower’s income sufficient to pay off the debt over a specified time. This process generally lasts three to five years and can cost $300 to $350 for the filing fee and $2,500 to $3,500 in attorney’s fees, due to the prolonged management of this type of proceeding.
It is important to think through all of your options. Once you file for bankruptcy there is a waiting period before you can file again. Talk with a lawyer who can advise you best on which route is best for you.
If you are hurt on the job due to unsafe working conditions, seek legal counsel, as you may be entitled to workers’ compensation or other benefits. As we have since 1967, we will continue to protect the legal rights of our clients – those who are hurt on the job while working for Alabama employers. If you have been injured on the job and want to learn your rights, please consider contacting the Nomberg Law Firm. Our office number is 205-930-6900.
Bernard D. Nomberg has been a lawyer for more than 20 years. Bernard has earned an AV rating from Martindale-Hubbell’s peer-review rating. In 2019, Bernard was named a Super Lawyer for the 7th year in a row.