5 Months into COVID-19 Lockdown in Florida, Now Might Be the Best Time to File Chapter 7 Bankruptcy

The COVID-19 pandemic has caused the world to come to a halt. Many companies have stopped operations, others have shut down completely. This has been the cause for 36.5 million unemployment filings in only 8 weeks. But the harsh reality is, even though jobs disappear, debt does not. If you were previously struggling with paying your debts and lost your job due to Coronavirus, now could be the best time to file Chapter 7 Bankruptcy. 

Historically, bankruptcy has been a viable option for many people and businesses, to discharge their debt and “re-start” their finances. It allows the debtor to be relieved of certain debts and/or reorganize their finances. In many cases, filing for bankruptcy has been a life-saver. 

Bankruptcy is usually thought of as a last resort to consider when all else fails. But in our current times, Chapter 7 may be the most reasonable option available for many people. Especially if the cause for the struggle lies in the loss of employment/income due to the pandemic. 

At Richard Adams and Associates, we are preparing for a “tsunami of new cases” as mentioned by fellow attorneys.

The reasoning behind our decision is that after months of lockdown and a mass wave of unemployment, many are reaching the necessary time period to pass the initial test to qualify for Chapter 7 bankruptcy, the means test. The means test is an income test to determine whether a person has a high enough income to partially repay their debt. In more technical terms, a means test “is a method for determining whether someone qualifies for financial assistance to obtain a service or good, for instance, welfare payments.”

To be eligible for Chapter 7 bankruptcy, a judge considers the debtors past 6 months of income. If the judge considers the income is sufficient to repay the debt in a plan that reorganizes said debt, it is unlikely for a Chapter 7 filing to be approved. If this is the case, the debtor may be better suited to file for Chapter 13. 

For this reason, many people may be at their best time (or reaching the best time) to file Chapter 7 Bankruptcy. The COVID-19 lockdown in Florida has been in place for several months. Those who were struggling with debt before the Coronavirus outbreak, and have now lost their jobs, are (at this moment) the ones who have the highest chances of being approved. Those who have seen a reduction in their income recently due to COVID-19 will have higher chances of approval if they wait a few months before filing. 

It is also important to mention that, in order to qualify for Chapter 7, the debtor must have not previously filed a Chapter 7 case in the last 8 years. And must have lived in their current state of residence for at least 6 months, or the majority of the past 180 days (minimum 91 days).

Nonetheless, the wisest choice for anyone who is currently floundering in debt is to consult with an attorney and figure out what options they have at hand. Usually, people try their hardest to resolve financial problems on their own. But consulting with an attorney will increase your chances of coming out of bankruptcy in better shape. 

At Adams Law, we recommend that if someone considers that there might even be a slight chance that they will be in debt trouble or unable to cover mandatory payments, they should request a Free Consultation before taking any action.

We, at Adams Law, PA, are dedicated and passionate in helping debtors take control of their personal finances and get out of debt through a bankruptcy filing. Contact us by phone (844) 321-6168 or by email lawyers@richardadamlaw.com to request your free consultation and no-obligation case evaluation.