What To Do Now If You Think You Will Need to File Bankruptcy in 2021
TRI Writer • November 25, 2020
2020 has been an unprecedented year. More than 22 million Americans have filed for unemployment. Cities and states across the country issued orders requiring companies to close their day-to-day operations, employees to stay home, and many to shelter in place all attempts to decrease the public’s exposure to the coronavirus. As the number of Americans who are out of work (or were out of work for a significant portion of 2020) grows, many expect the number of Americans considering bankruptcy in 2021 to increase.
High Unemployment Rates Typically Mean an Increase in Bankruptcy Filings:
With the number of Americans out of work increasing exponentially in 2020 (experts estimate the number of out of work Americans could reach 47 million or a 32% unemployment rate), many households across the country are worrying about how they’ll pay their rent, their bills, and still afford the essentials.
Before You Decide the Declare Bankruptcy in 2021:
If you are one of the countless Americans facing financial struggles due to the unprecedented measures taken to control the spread of the coronavirus, make sure you’ve considered all the options. Before you file:
- Consider Your Situation and Your Options: You can make minimum payments to stay current and wait it out hoping that your financial situation will work itself out, you can contact your lenders directly to request a settlement on the balance, or you can file bankruptcy. Particularly right now, during the Covid-19 pandemic, many lenders have programs and policies in place to help people in your situation. It is a temporary solution, but this may be all you need.
- Know the Terms of Any Assistance Programs: If you do decide to take advantage of assistance programs directly from lenders and financial institutions, make sure you know the terms of their programs. Again, this is an unprecedented year, and many of the programs in place are not typical, so the terms may not be as expected. For instance, some companies offering “no payment” relief may require full payment of all missed or skipped payments after a specified time or a certain number of skipped payments, etc. Make sure you are fully aware of the various terms of the special offer or assistance program you are entering.
- After the Temporary Assistance Programs End: Once the temporary Covid-19 programs end, you may still need help. If you participate in a “temporary” relief program with a lender, it ends, and you still need help to meet your financial obligations, you may need to think about more long term solutions like filing bankruptcy in 2021.
Once You Decide to File Bankruptcy in 2021:
If you have exhausted all your options, and looking at your finances makes it clear that there is a bankruptcy in your future, you may need to accept that you need to file bankruptcy in 2021. Once you decide to file, make sure that you:
- Stop using credit for any significant purchases.
- Do not sell any of your assets.
- Do not pay off any loans or account balances.
- Do not “gift” any assets.
- Do not make major, non-essential or extravagant purchases.
If you have questions about how to prepare to file bankruptcy in 2021 , we can help. Find out how to get a fresh start by filing bankruptcy. Get in touch with Ken Rannick at Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney as soon as possible.
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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.