Bankruptcy and COVID-19
Life for the average American changed drastically around March 2020 as word of the fast-spreading COVID-19 became rampant. In what felt like a moments time, thousands and thousands of Americans became sick with the novel coronavirus and a pandemic was announced by the World Health Organization (WHO). The COVID-19 health crisis has forced governments to issue stay-at-home orders and social distancing measures to protect their citizens and to stop the spread.
The shutdowns and reduced activity have unfortunately resulted in many losing their jobs or businesses. Without any income, thousands of Americans are left wondering how to survive. Those who already had debt prior to the virus are suffering even more, as now they have no way to pay back creditors. The fast rate at which Americans are losing their livelihood caused the government to jump into action and admit the CARES Act. Modifications to the CARES Act allowed some temporary changes to substantive bankruptcy rules to ease the bankruptcy process during this turbulent strange time.
Both individuals and small businesses can still pursue bankruptcy, and for some it’s the best option. The unpredictability of the COVID-19 pandemic means it’s best to be prepared for what happens next. Having debt while the economy is at an all-time low isn’t good news and there’s no proof it’ll get better anytime soon. Plus, filing for bankruptcy may be the one thing that can save your financial health if you’ve lost your job or closed your business. If you are interested in learning how to file for bankruptcy during COVID-19, we recommend you hire experienced legal representation as soon as possible.
Filing for Bankruptcy During COVID-19 in Ohio | Cincinnati Attorney, OH
COVID-19 has impacted nearly every life in the Ohio and Northern Kentucky area. As the situation continues to evolve, the attorneys at Steiden Law Offices want to reassure our clients and the communities we serve that we are taking the situation very seriously. We’ve implemented our own safety measures in the office so we can prioritize the health and well-being of both clients and staff. Additionally, the attorneys at Steiden Law Offices have not stopped working. We are here to address your needs and questions.
If you are looking to file for bankruptcy, then look no further than the attorneys at Steiden Law Offices. Attorney Eric Steiden has decades of experience he can utilize for your filing. In addition, the attorneys and staff at Steiden Law Offices are carefully monitoring all COVID-19 legislative changes as well as updates from the Centers for Disease Control and Prevention (CDC) and the Ohio Department of Health. Rest assured that if you choose Steiden Law Offices, you will have a team of individuals on your side who will do anything to protect both your financial and physical health.
Set up your first consultation by calling Steiden Law Offices at . Steiden Law Offices accepts clients throughout the greater Ohio and Northern Kentucky area including Hamilton County, Boone County and Kenton County, Campbell County, Gallatin County, Grant County, Pendleton County, Bracken County, Robertson County, Mason County, in Kentucky, along with those who reside in Hamilton County, Butler County, Clermont County, Warren County, Clinton County, Montgomery County, Greene County and many more.
- Filing for Bankruptcy During COVID-19 Under the Cares Act
- Small Business Bankruptcy Changes During Coronavirus
- Chapter 7 Relief for Business Owners During COVID-19
- Social Distancing Bankruptcy Court Measures in OH and KY
- COVID-19 Information & Resources
Filing for Bankruptcy During COVID-19 Under the CARES Act
The COVID-19 crisis put the whole economy at a stand-still and now hundreds of thousands of Americans are trying to recover. In an attempt to ease financial burden, federal legislation enacted the Coronavirus Aid, Relief and Economic Security (CARES) Act. The Act allows some modifications to bankruptcy rules and proceedings and will expire on March 27th, 2021. The purpose of these changes is to allow borrowers to file for bankruptcy despite the stormy and inconsistent nature of the current economy.
There are numerous changes to bankruptcy proceedings under the CARES Act. For instance, borrowers who have a pre-existing Chapter 13 repayment plan can possibly extend the length of their plan upwards to seven years. The extension allows those already struggling to meet their repayment plan survive during the COVID-19 health crisis if they’ve lost their job or business. Obtaining modifications like this will require notice to the court as well as a hearing. At the hearing, the borrower must have proof they’ve undergone financial hardship as a result of the COVID-19 outbreak.
In addition, stimulus checks and other relief payments under federal law related to the coronavirus do not count as current monthly income for debtors seeking to file under Chapter 7. These payments will also not count as disposable income for any borrowers who wish to file for Chapter 13 bankruptcy. That means you can collect your stimulus check and it won’t affect your ability to file for bankruptcy under Chapter 7 or 13.
Small Business Bankruptcy Changes During Coronavirus
It’s safe to say small businesses have struggled the most to survive during the novel coronavirus health crisis. Companies and businesses who were already struggling with debt are now overwhelmed due to consistent shutdowns and reduced economic activity. Recent changes under federal laws have implemented more options for small business owners during the COVID-19 pandemic. One of these changes has been to expand the range of Subchapter V for Chapter 11 bankruptcy to cover more small businesses.
Businesses can now qualify for Subchapter V if it has up to $7.5 million in non-contingent liquidated secured or unsecured debt until March 26th, 2021. This is beneficial to small businesses as Chapter 11 bankruptcy under Subchapter V is similar to a Chapter 13 bankruptcy. Subchapter V eliminates the creditor committee requirement, where the seven largest unsecured creditors of the business will form a committee to monitor operations and develop a reorganization plan. Instead those filing for bankruptcy under Chapter 11 Subchapter V will have a trustee monitor the borrower’s payments. This will mean the borrower will be able to retain more control over their own business ventures.
The relief administered under Subchapter V is also much more efficient. Debtors must submit a proposed reorganization plan within 90 days of filing for bankruptcy. It must be approved by a judge, not the creditors, and if the plan is fair and equitable the judge will accept it. Eligibility for Subchapter V under Chapter 11 bankruptcy requires a lot of additional information. Borrowers must submit a wide range of financial disclosures and reports throughout the process to obtain the relief they desire. Managers of the business are expected to attend a series of meetings such as a debtor interview, scheduling conference, and a Section 341 meeting of creditors.
Chapter 7 Relief for Business Owners During COVID-19
Businesses who don’t qualify for Subchapter V relief may be able to file for bankruptcy under Chapter 7. Unfortunately, Chapter 7 debt discharges aren’t available for businesses that have already shut down. So, borrowers who were forced to close their doors may not be advised to pursue Chapter 7 bankruptcy.
Often Chapter 7 bankruptcy is a much more attractive option to sole proprietors than a small business owner. The reason for this is because sole proprietors who file under Chapter 7 normally do so they can receive a discharge for personal as well as business-related debt. This way they can greatly reduce their overall debt and still be able to stand on their feet during the COVID-19 outbreak. For instance, a sole proprietor with a service-oriented operation may be able to keep their doors open by relying on their own labor. Meanwhile their bankruptcy trustee will sell assets of the business to pay off creditors.
It’s important to note, however, that the bankruptcy trustee has the discretion to decide whether the business should stay open or not. They may not allow the business to stay open if they don’t have some safety measures in place such as liability insurance.
Social Distancing for Bankruptcy Courts in Ohio and Kentucky
Legal courts in every U.S. state are implementing accommodations so they can do their part in stopping the spread of COVID-19. Bankruptcy courts in both the state of Ohio and Northern Kentucky are no exception. Many changes have been executed in an effort to protect Ohio and Kentucky citizens who are wishing to file for bankruptcy.
Obtaining an original signature (also known as a “wet signature”) from a borrower on the petition for bankruptcy has always been a requirement. Unfortunately, the coronavirus outbreak has caused certain bankruptcy courts to waive this requirement. Both borrowers and their attorneys can review the paperwork virtually and aren’t required to meet at the attorney’s office for a physical signature.
Borrowers wishing to file for Chapter 7 or 13 bankruptcy typically are required to attend a meeting of creditors. However, concerns surrounding the COVID-19 pandemic has moved these meetings to over-the-phone. Creditors and borrowers can meet under Section 341 of the Bankruptcy Code over the telephone or other forms of remote communication. Courts continue to modify these procedures and which technology is required depends on the court.
COVID-19 Resources for Bankruptcy
Ohio Department of Health | Coronavirus Information – Visit the official website for the Ohio Department of Health to learn more about their efforts to slow the COVID-19 pandemic. Access the site to read the latest updates, watch helpful videos, educational resources, and ways you can help reduce COVID-19.
The CARES Act | Coronavirus Economic Assistance – Visit the official website for the U.S. Department of Treasure to learn more about the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Access the site to learn what changes to bankruptcy laws the CARES Act has implemented, stimulus check information, assistance for small business and tribal governments.
Bankruptcy Lawyer Explains How to File During COVID-19 | Ohio & Kentucky
If you are interested in filing for bankruptcy, it’s imperative you seek legal representation you can trust. The COVID-19 outbreak has yielded many changes in both federal and state bankruptcy laws, so it’s important you have an attorney who is knowledgeable on those modifications. Thankfully, you don’t have to look very far to find that attorney. For excellent and efficient legal representation, we urge you to contact the attorneys at Steiden Law Offices.
Eric Steiden and his team at Steiden Law Offices have filed over 6,000 successful petitions. We understand what it takes to assess your finances, create a plan that works, and how to present that to the judge. Not only that, but our team at Steiden Law Offices study the upcoming developments with COVID-19 every day. To learn more about us and what we offer call Steiden Law Offices at . We practice throughout the greater Ohio and Northern Kentucky area including Blue Ash, Montgomery, Edgewood, Elsemere, Villa Hills, Covington, Erlanger, and Fort Mitchell.