Many people and businesses are experiencing financial hardship right now, especially in the midst of the COVID-19 crisis. Millions of workers have lost their jobs, and the virus is causing a lot of disruption in the economy right now, since hundreds of millions of people across the nation are confined to their homes. If you are experiencing financial distress, this might be the right time to start considering your financial options. But when should you consider bankruptcy?
When should you consider bankruptcy?
Whether you have recently lost your job or are simply struggling to pay off student loans or credit card debt right now, it might be time to consider filing for bankruptcy. Here’s some info you should know if you are thinking about bankruptcy:
- Don’t wait to discuss your options with a bankruptcy attorney. People with a lot of debt and financial issues are told to try to solve their debt problems on their own or talk to a credit counselor and only turn to bankruptcy as a last resort. However, people who get advice from bankruptcy attorneys early on are usually in the best shape later on. So when you are considering bankruptcy, it is best to discuss your options with a bankruptcy attorney right away.
- Don’t touch your retirement money. When you are considering bankruptcy, it is a terrible idea to touch or move your retirement funds. With the financial hardship caused by COVID-19, people are allowed to take up to $100,000 out of their retirement accounts without mandatory withholding or penalty. These withdrawals are taxable, but people who can pay the withdrawals back within three years of taking it out of their accounts are allowed to change their tax returns and have the taxes refunded. However, most people will not be able to pay the withdrawals back. Since your retirement money is protected from creditors, you should keep it safe in your retirement account.
- Don’t let cash pile up. While a cash buffer is definitely important, any money in your bank account can be seized to pay creditors, so it is better to stash that extra cash away in a Roth IRA. The bottom line is that you shouldn’t keep the extra cash in your bank account, and you should discuss where to place it with a bankruptcy attorney in order to protect it from creditors.
- Don’t sell your possessions. When you are considering bankruptcy, it’s super tempting to sell your possessions to pay down your debts. However, if you think that bankruptcy might be an option, you should definitely check with a bankruptcy attorney before selling any of your stuff. You might need that stuff after you file bankruptcy to sell to pay your rent.
- Don’t pass up forbearance options. Due to the COVID-19 crisis, many lenders are allowing people to skip payments. So if you have the option, definitely take advantage of these forbearance opportunities, since these debts would eventually be erased in a Chapter 7 bankruptcy and forbearance can help you save money for things like food, utilities and paying your attorney.
What are the first steps for bankruptcy filing?
First, you need to consult with a bankruptcy attorney, like Van Horn Law Group, who handles business bankruptcy filings. Do not try to file for bankruptcy yourself! It can lead to some pretty serious financial and legal issues. Instead, it is super important that you choose a bankruptcy attorney who can help make the filing process as simple and seamless for you as possible.
Schedule a free consultation by visiting www.vanhornlawgroup.com or call (954) 765-3166.