COVID-19 pandemic has triggered a panic and people are frightened. There is concern about employment loss because until now nearly 22 million employees on American soil have filed for unemployed claims. This is because the states and cities have ordered a complete lockdown to balance the public health effect from coronavirus.
It is predicted that unemployment rates will be around 32% in America. Without work, people will not be able to pay their bills and rent as well as other necessities like grocery. According to a survey, 7 out of 10 people are concerned about paying their loan debts.
Many people are experiencing a shortfall and visit New York bankruptcy attorney Pierce McCoy for consultation associated with filing bankruptcy. The firm has wide experience in offering advice to not just large multi-national creditors but even SMB debtors. The experts suggest people wait for some time and not jum,p but understand the process first before declaring bankruptcy.
Know your options
When debt spirals out of control, there are three options the debtor needs to consider.
- Pay the minimum amount on every bill, stay current and strongly try to pull this out as much as you can with the hope that your business picks up.
- Approach lenders to negotiate for some kind of settlement.
- File for bankruptcy.
Bankruptcy has to be the last resort, especially in this COVID-19 pandemic. Never leave hope! Fortunately, you can regain some time or get payments lowered through negotiation with loan services or banks.
Call lenders for help
Before you begin to incur delay, call your lender and ask for assistance. Many lending institutions and banks have designed special payment programs and forgiving late fees, you need to be proactive and request these forbearances. Sometimes the temporary relief of 180 days is not sufficient for many debtors, but it is the first step.
After the forbearance period ends, take an extra step
The deferment and forbearance programs have their limitation and as soon as it ends you need to repay the bills. Your lender will need to pay every missed payment, at the same time. If you are struggling then request long-term relief like lowering monthly amounts or interest rates. Apply for a loan modification, which will rework mortgage terms. If you are lucky, your application will be approved and monthly payment reduced to an affordable amount.
How does bankruptcy work?
There are two kinds of bankruptcy people file – Chapter 7 & 13.
Chapter 7 – In this type, you will sell all your valuable assets and pay the debt. All your outstanding debts are removed as soon as the Chapter 7 bankruptcy application is approved in court. This type is good for individuals, who are unable to pay a part or all the debt.
Chapter 13 – This type is called a reorganization bankruptcy. People with regular income are offered a suitable plan through which they can repay part or all their debts in installments. There is no need to sell any assets to repay but make efforts to pay via a consolidated repayment plan approved by the court. The period is generally 3 to 5 years, after which the remaining unpaid debt is squared.
Bankruptcy filing costs money and is not the end of financial life. It offers a fresh start!