Chapter 13 Bankruptcy Can Help You Weather the Coronavirus Pandemic

Record Number of Unemployment Filings Due to COVID-19. 

On 3/26/2020, Phoenix Bankruptcy Attorney and Staff write:
business closed due to COVIG19, Chapter 13 bankruptcy and Coronavirus.

Many Phoenix Businesses have closed die to COVID-19.

Due to the spread of COVID-19 various quarantines and shutdowns are in place to help mitigate it.  Millions of Americans are having their hours or salary cut, or even worse, losing their job altogether. A record 3.3 million people filed for unemployment this week. If you are one of the many being financially affected by the pandemic, filing a Chapter 13 bankruptcy and Coronavirus may be a good option to help you stay afloat.

Although payments on government loans like mortgages have been suspended or reduced in some other way, they will still need to be repaid once life returns to normal. Thus, if you have been laid off, chapter 13 bankruptcy and Coronavirus relief might make sense.  Additionally, when Phoenix jobs resume; you may find yourself in financial peril.  Even worse, if you don’t find a new job quickly. The time it takes to find new employment may be longer than usual as many companies are downsizing or dealing with switching to remote work extremely quickly. If you have fallen behind on your mortgage, filing a Chapter 13 bankruptcy will allow you to catch up on the past-due amount over the 3-5 year span of your bankruptcy.

Chapter 13 Allows You to Catch Up on Vehicle Payments

Additionally, if you fall behind on car or other vehicle payments that you can typically afford, an Arizona Chapter 13 bankruptcy can help you in a similar way. Plus, the entire balance of your car loan will be payable over the course of your 3-5 year bankruptcy. This effectively spreads out any past-due amount if you are being threatened with repossession.
If your income is too high for a Chapter 7, you have more equity in your assets than your state’s exemption amounts, or if you have filed a Chapter 7 in the last 8 years, Chapter 13 is an option for you. Thus, if you make above your state’s median income level for your family size, you will need to pass a means test to qualify for a Chapter 7. Also, if you have any disposable income after deducting court-allowed expenses from the average of your last six months of income, Chapter 13 may be your only choice in which bankruptcy chapter to file. Therefore, you should speak with an attorney to determine which chapter you can file.

Chapter 7 Bankruptcy Limits in Phoenix

Debt stress due to effects of CoronavirusArizona has limits on how much equity Chapter 7 bankruptcy filers can have in their assets. The homestead exemption for Arizonans is $150,000. A single filer can have $6,000 equity in one vehicle. Married filers can have $6,000 in each in two vehicles, or $12,000 equity in one vehicle. Assets with equity above the exemption amounts can be seized by your bankruptcy trustee and sold to pay your debts. If you want to keep your valuable assets but need help managing other debts, Chapter 13 is a good option for you.  Consult an experienced Chapter 13 attorney in Phoenix today.

You can only file a Chapter 7 bankruptcy once every eight years. Therefore, if you previously filed to get back on your feet, you were probably particularly vulnerable to the underemployment caused by the spread of COVID-19. If need the stay of protection provided by filing bankruptcy to prevent garnishment, foreclosure, or repossession, Chapter 13 is still available to you.

Every Phoenix bankruptcy filer has a unique situation.  However, they all usually have one thing in common: life threw crazy circumstances their way.  Despite current circumstances, everyone will struggle to make ends meet. Medical bills and underemployment were already top causes of bankruptcy before the coronavirus pandemic started. If you are considering bankruptcy but don’t think Chapter 7 is the right choice for your situation, you should speak with an attorney about filing a Chapter 13 bankruptcy. Our office offers free phone consultations so you can decide if this is the best option for you risk-free.