Personal Bankruptcy in the Time of Coronavirus

It is not clear what the long-term ramifications are following the historic coronavirus pandemic.  What is an unfortunate consequence is that many folks in Massachusetts may need to consider filing for personal bankruptcy.

Attorney Neil Burns recalls that when the federal bankruptcy laws changed in 2005 there was a dramatic increase in Chapter 7 filings.  When the Crash of 2008 happened, Attorney Burns and his firm filed all too many bankruptcies for families in the months and years thereafter.  In each wave of bankruptcies, the “fresh start” law was proven helpful.

The Coronavirus will likely cause financial stress for many.  Folks need to plan:  which bills to pay first, which bills can be discharged, how does the Massachusetts Homestead work, how to stop collection cases and how to navigate the federal bankruptcy system.  Folks need to have an experienced bankruptcy lawyer.

Unemployment and the Coronavirus and Massachusetts Bankruptcy

Many folks will be able to live on their savings and the various unemployment insurance programs, state and federal.  Many folks will not.  Some folks don’t qualify for the programs because they were between jobs.  Some folks need more income.  Some people will not qualify for Chapter 7 personal bankruptcy because of their family household income notwithstanding being unemployed.

It’s complicated.  You should retain an attorney if you can’t pay your creditors during unemployment during the coronavirus pandemic.

Coronavirus and Medical Bills Resulting In Massachusetts Bankruptcy

In 2018 a Federal Reserve study determined that 40% of households would be unable to find $400 in an emergency.   Notwithstanding Mass Health, many folks who get sick, or are impacted by illness in their family, may need to file for bankruptcy protection here in Massachusetts.

Health care bills are generally dischargeable in bankruptcy.  So are many other consumer bills.  It’s not clear what federal or state legislation will be enacted, but you should be ready, with an experienced bankruptcy lawyer if you have considerable debt and insufficient assets and income to pay it off.

Coronavirus and Using Your Retirement Monies Verses Bankruptcy

Folks who accumulate debt often tap into their retirement reserves in times of financial difficulty.  We would recommend meeting with a bankruptcy attorney BEFORE doing so because most retirement accounts are protected from creditors in bankruptcy.  However, once the monies are withdrawn, they are “reachable” assets from the creditor’s perspective.

Again, we recommend you undertake bankruptcy planning.   And we offer a free consultation!

Massachusetts Attorney General Helps Debtors Amid COVID-19

On March 27, 2000 the Massachusetts Attorney General, Maura Healey, established regulations –  to be in effect for 90 days, or until the State of Emergency is lifted by the Governor.

First and foremost, under the AG’s order there can be no new lawsuits to collect consumer debt.  That is, if you are late on your credit card, they cannot sue you until at least June 27.  While filing for bankruptcy “stays” any collection matter, this gives folks even more breathing room, as there can be no new lawsuits anyway.

Second, debt collectors cannot visit you at work or at home, or threaten to visit you at work or at home, and they cannot call you (unless you call them first or it is an individual trying to collect his or her own debt).  This too gives debtors more breathing room as Burns & Jain frequently gets contacted when there is an impending court date or new notice “thrown at the door.”

There are new restrictions during this time period regarding garnishing your wages and repossessing vehicles.

Burns & Jain Has 35 Years of Bankruptcy Experience

Attorney Neil Burns has represented debtors in Chapter 7 personal bankruptcy since 1985.  We have represented clients in all of the bankruptcy districts in Massachusetts.

Personal bankruptcy is more than filling out a form.  You need to plan.  To plan, you need to know the law.  The law is complicated but can be amazingly beneficial to folks who need a “fresh start.”

Call for a free consultation:  617-227-74123.

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