The connection between coronavirus and bankruptcy is not a shock for any of us. The economy has been shakier than ever and there is no way everyone will be able to recover post-pandemic. Hence, it is quite obvious for people to think about going bankrupt as an option as the result of recent changes that the world has been facing.
If you own a business or are a debtor of a personal loan for which you now think that bankruptcy is your best option, we urge you to rethink your decision. There are several reasons why we are saying this, but what you need to keep in mind is that recent bankruptcies of 2020 should not be the cause behind your decision!
Things to keep in mind
If you are wondering whether the bankruptcy court is still working and is it still possible to file bankruptcy, then the answer would be yes, the process is still in place. Personal meetings are not happening, but the procedure can take place over a phone call as well.
Now comes the question as to if you should file for it or not. Businesses that have completely gone out of business or those who would have to come up with a new plan from scratch even post-pandemic are the ones that would be considering this option the most. The highlighted names involve restaurants and theatres for which the world has turned upside down. However, there can be other businesses that might have taken a hefty amount of loan before the pandemic and are now not earning good enough to pay their loan back according to the payment plan.
While thinking about all the bankruptcies of 2020, this can be an option for everyone listed above and also for those who might have taken a personal loan for a house, you need to keep in mind that going bankrupt doesn’t necessarily translate to being completely free of your loan. While chapter 7 is considered a straight option out by selling all your assets, chapter 13 which is also called reorganization, and chapter 11 which is the same thing but for business demands you to start a new payment plan through which either the interest or the amount of loan is decreased but you still have to pay some part of your loan in the next 3-5 years. Plus, there is always the stamp that will stay on your credit for the next 10years if you choose to go bankrupt!
What should I do then?
Our recommendation would be to only opt for this if it is the only thing you can do. The reason why COVID-19 is not just a reason because of which you would want to file for it is because of the relief plan. If you are getting funds from there, you are not obliged to include them in your payment plan which is a benefit for the debtor. Plus, because of the situation, there are certainly different levels at which government and personal investors are allowing ease in the payment process so you can always talk it out.
Lastly, if you still opt for bankruptcy, do keep in mind that you need to first consult an expert and only then start the process. Also, while the dates might be delayed for the hearings, the filing and fee processes should not be delayed!