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What You Need To Know About Bankruptcy During COVID-19

No one decides to file for bankruptcy quickly. In our experience, most people do a lot of reading up on the process. This is even more true during the COVID-19 pandemic. Nothing is normal right now, including legal proceedings.

If you are thinking about filing for bankruptcy during the coronavirus pandemic, call attorney Holly Shattuck at The Law Group of Northwest Arkansas LLP at (479) 316-3760 or contact us through our online form. We will set up an initial consultation and talk you through whether bankruptcy is right for you. We will also explain how the bankruptcy process differs during the pandemic.

Is Bankruptcy Court Closed?

No. Bankruptcy courts in Arkansas are open and operating. You can file for bankruptcy during the pandemic, though the process will differ slightly.

Do You Need To File for Bankruptcy?

The pandemic has hit many businesses, families, and individuals hard. You might be out of work and living off unemployment and savings. Even if your bills and debts are overwhelming right now, you might not need to file for bankruptcy.

You first can contact businesses about what you owe and whether they are providing any discounts or assistance to people suffering financial hardship because of the pandemic. You can look for local charities helping with rent, utilities, and groceries. Also, review whether you are eligible for the Arkansas Supplemental Nutrition Assistance Program (SNAP), which helps pay for food.

Once you have taken advantage of all your options for financial help, talk with an attorney about whether bankruptcy could help. A lawyer will explain the pros and cons of filing for bankruptcy. They also will go over the eligibility requirements for Chapter 7 and Chapter 13, and which might be right for you.

Hiring a Lawyer Is More Important Than Ever

Due to the COVID-19 pandemic, a lot of business and legal proceedings are taking place virtually. This makes everything a bit harder to figure out. You cannot go to the courthouse for most proceedings. Hiring a bankruptcy attorney is helpful because they know what changes have taken place. We have already adapted to the new way of doing things, including filing your paperwork electronically and attending hearings virtually.

Prepare for Virtual Meetings

Traditionally, you would meet a lawyer and attend hearings in person. But to slow the spread of the virus, it is better to talk through phone and video calls. Most lawyer meetings are being conducted by phone and video right now, and most smart phones allow video call capabilities.
The U.S. Bankruptcy Court for the Eastern and Western Districts of Arkansas has been operating under an administrative order since March 2020, which stopped all in-person proceedings. Although individual judges can decide to hold in-person hearings with safety protocols in place, hearings are usually held over the phone. You can look at the court’s News & Announcement page to see if COVID-19 protocols change.

Before filing for bankruptcy, you have to complete a credit counseling class. After filing, you have to take a financial management course. You can expect to take both of these classes online. Your lawyer will help you find a reputable online class.

During a bankruptcy, you have to attend a “341 meeting” with an assigned trustee. The U.S. Trustee Program also requires phone conferences instead of in-person meetings right now.

Changes Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act

The CARES Act made some temporary changes to Chapter 7 and Chapter 13 bankruptcy laws. For example, the federal government’s stimulus payments do not count as current monthly income under Chapter 7 or disposable income under Chapter 13. This is important because the stimulus check cannot affect your eligibility to file for bankruptcy.

If your Chapter 13 bankruptcy was pending before the CARES Act, you could ask for your payment plan to be extended due to pandemic-related hardship.

Call The Law Group of Northwest Arkansas LLP for Help

Filing for bankruptcy is a big deal, which is why you should talk with a lawyer more about it. Our Arkansas bankruptcy attorneys can explain your options and whether bankruptcy is a good option for addressing your debt during COVID-19. You can request an initial consultation by contacting us online or calling (479) 316-3760.