How To Protect Your Credit During the Coronavirus Pandemic
TRI Writer • August 11, 2020
The Covid-19 pandemic is affecting people throughout the world. Many have lost their jobs or experienced significant pay cuts. Some businesses are struggling, and others have shut their doors. It’s no surprise that a lot of people are having a hard time financially. Times of crisis like the one we are currently in leave people from all walks of life thinking about their future.
The Covid-19 Pandemic Has Turned People’s Financial Lives Upside Down
Did you recently lose your job? Is your business struggling to make it out of the downturn? Are you struggling to pay the bills that you had no problem managing just months ago? As you do your best to keep your accounts in good standing and your household finances healthy, don’t forget to give your credit score some thought. You may be delaying large purchases right now – like buying a home, purchasing a vehicle, or going on vacation. But eventually, you will start spending again, and you’ll need to depend on a good credit score. Trust us, as Tennessee and Georgia bankruptcy attorneys we know!
Don’t Let the Covid-19 Pandemic Turn Your Credit Score Upside Down, Too!
You may know that you want to protect your credit score during the Covid-19 pandemic, but you may not know how to make it happen. Consider the following tips to protect your credit score during the pandemic.
How To Protect Your Credit Score During the Pandemic:
- Watch Your Credit Reports: Regularly review your credit reports from all three of the major credit bureaus. Free annual credit reports are always accessible, but through April 2021, Experian, Equifax, and TransUnion allow consumers to pull free reports weekly. Checking your report more frequently is essential right now to ensure that any accommodations you may request from your lenders or accounts report accurately and that there are no signs of identity theft.
- Avoid Late Payments: During times of financial difficulty, it may not be possible to fulfill all your financial obligations. But make on-time payments a top priority. Late payments can negatively affect your credit score for up to seven years. During these unprecedented times, many lenders and account servicers offer special deferments and programs to assist those affected by Covid-19. Taking advantage of a special program is preferable to falling behind on your payments. A missed house payment is worse than a missed credit card payment. A repossessed car(even if it’s voluntary) is worse that that. Some lenders are willing to provide loan extensions, payment reduction, forbearance periods, or other repayment options that can be very helpful. When making this type of arrangement, make sure you receive the offer in writing.
- Look Into Possible Protections: The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) offers protections that may help maintain your credit score and protect it from the repercussions of the Covid-19 pandemic. In certain situations, the Act requires some agencies/companies to report payment information based on the consumer’s current standing when the agreement is made. The requirements are only applicable to agreements entered between Jan. 31, 2020 and 120 days after the Covid-19 national emergency officially ends. Look into the protections provided by the CARES Act to see if you qualify. It takes you to contact your creditor to get these protections. Don’t assume the lender knows and will extend you help. You must be the one who initiates a work-out deal.
If you are worried about protecting your credit score during the Covid-19 pandemic, you’re not alone. Many people, just like you, are struggling to make ends meet during these unprecedented times. If you need to talk about your options and how to get a fresh financial start by filing bankruptcy , trust the experienced Tennessee and Georgia bankruptcy attorneys at Kenneth C. Rannick P.C. We can help you determine your best options. We help good people through bad times every day, and we can help you, too.
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Struggling with debt? Learn seven key signs that it might be time to consider bankruptcy. Kenneth C. Rannick P.C. offers legal guidance to individuals in Chattanooga ready for a financial fresh start.
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Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses? In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.