Thousands of businesses around the world are expected to go bankrupt by the end of the year due to the economic damage caused by the coronavirus pandemic. Governments in leading economies are now trying to prevent this.

Last week, the overall picture of the scale of the effects of the COVID-19 coronavirus pandemic on the global economy became somewhat clearer. It was then that a number of countries released their economic indicators for the second quarter of 2020. During this period, the lockdown introduced in many parts of the world led to the shutdown of entire industries and services.

In Europe, the deepest economic decline was recorded in Spain – in the second quarter of this year, its economy fell by 18.5% compared to the previous quarter. In France and Italy, the economic downturn was also quite sensitive – 14 and 12%, respectively. The recession did not bypass even the largest economy on the continent – Germany. Here, in the second quarter, economic activity fell by a record of 10.1%.

Actually, in other countries of the world in the period from April to June the economic situation was not better. For example, in the United States, the decline in the Gross Domestic Product (GDP) reached 9.5% compared to the first quarter, and in Japan, according to preliminary estimates, the economic downturn was more than 11%.

United States

The United States has not made direct changes to Chapter 11 of the Bankruptcy Act. However, the package of economic support measures adopted in March this year provides, in particular, support for enterprises involved in countering the pandemic. The law passed by lawmakers contains a package of economic incentives worth more than two trillion dollars. It was the largest package of economic support in US history.

In addition, the US Federal Reserve System has allocated an additional $500 billion to finance the government’s program to lend to troubled companies.

Small and medium-sized businesses are supported through lending programs run by the Small Business Administration (SBA) and a Paycheck Protection Program (PPP). The minimum threshold that allows businesses to take advantage of this program has recently been raised from $2.7 million to $7.5 million per company.

However, to take advantage of this program, a company does not have to be insolvent. In addition, the company’s management should provide a business plan on how it intends to integrate the proposed government support into the company’s long-term development strategy to overcome the current difficulties.

The collapse of many market players is imminent

However, many special support programs will expire in the coming months, creating the risk of a second wave of economic crisis around the world, including a growing number of bankruptcies.

Small firms with limited financial reserves and small margins will have a particularly difficult time. For them, any reduction in support programs can put an end to attempts to survive, which will simply destroy them.

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The COVID-19 pandemic will seriously change our lives, our economies, and our financial situation. Already, many are thinking about filing for bankruptcy.

In 2019, more than 38,000 Californians filed for bankruptcy. This year’s figures are still difficult to predict.

Before succumbing to the general trend you should:

• Try to negotiate with creditors. Suggest options for repaying a loan or restructuring payments. Get advice from a specialist who will review your case.
• Examine your debts. By law, not all debts can be written off even in the event of bankruptcy.
• Examine state laws for asset recovery (and security), and types of bankruptcy.

Why do people file for bankruptcy?

The most common cases:

Lack of financial knowledge and adequate planning. Before investing in your own or someone else’s business, you need to conduct a thorough analysis, draw up a clear business plan, study the taxation of the state in which the work will go. A lot of people conclude deals with a shake of hands, which has no legal force. An important point is that you cannot open a business without having a financial reserve for at least a year.

Another reason is that people spend more than they earn. If banks give credit cards, this does not mean that this is free money, which should be quickly withdrawn for various needs.

Also filed for bankruptcy in cases of disability and/or job loss.

Bankruptcy attorney

Most judges do not allow the filing of certain types of bankruptcy (for example, under chapters 11, 13) without the participation of a lawyer. They are technically complex and without a legal education is impossible to do. If you are unable to pay a lawyer, you can find the free help option through your state bar.

The lawyer must make a full inventory of the property and all debts. Under the laws of the state, something will be considered exempt and not subject to seizure and further sale in order to pay off debts.

The lawyer is also present at the interview of the client with the bankruptcy bailiff, whose task is to find the property, sell it and pay the creditors.

A lot of fraud is connected with bankruptcy procedures, and if this is discovered, then a criminal investigation will be opened.

There are times when they can confirm bankruptcy, but one of the debts will be regarded as fraud. In this case, after the end of the bankruptcy procedure, you remain owed the amount to the creditors.

There are still options that some types of debts are not a write-off. In this case, after the end of the bankruptcy procedure, you will still be left with these debts that need to be paid.

A very common story: an expensive car is bought, several monthly payments are made for it, and it suddenly disappears. Technically, they cannot pick it up, so the matter is transferred to a different level of solution.

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If you have accumulated too much credit card debt, then your financial strategy was unsuccessful. Or maybe it was not at all? People often quite spontaneously spend money from credit cards, which leads to a logical result – accruing debts. However, do not panic. You need to reconsider your attitude towards finances and take urgent measures that will restore your well-being.

Priority on the cost of the loan

Each credit card has its own conditions. Different cards may vary the duration of the grace period, the presence of attractive bonuses, the percentage value. Many of these factors were important in the selection and design of the card. However, now, when repaying the accumulated debts, all of them are completely unimportant, except for only one thing – the value of your regular overpayment for using each card.

When repaying debts on the card, you should choose the card that costs you the most. It is necessary to make the maximum possible amount of funds. Having fully repaid the debt on this card, we close it and take a certificate from the bank that there are no debts on this account. This is a very important point! It is necessary not only to throw away the card, and not be too lazy to personally visit the bank, write a statement and make sure that an employee of the institution cuts the card with you, destroying its chip.

After that, choose the next most expensive card to maintain and close it. Act so until you figure out all the cards in turn.

Debt Priority

If there is very little money and there is a lack of timely repayment of all payments, delays can become inevitable. In this case, you have to choose which of the debt consequences of delaying payments will be less painful. We immediately exclude the payment of the mortgage from the list of possible delays. It is not worth risking with such loans, because the bank may consider that the only option for it to return money will be to collect the apartment of the debtor. Losing your home is an extremely unfortunate scenario.

You should not also try to “save” on utility bills. You just turn off the light or water, and it dramatically reduces the quality of your life. Such circumstances will prevent you from working normally and earning, which will inevitably affect your ability to pay. Then servicing the remaining bills will become disproportionately difficult.

You can not refuse from the cost of travel and food. True, these two graphs can be significantly reduced.

Unsecured consumer loans, as well as credit cards, should be attributed to lower priority costs. In the worst case, due to delays in them, you are threatened with deductions from your salary due to the enforced collection, and to the extent allowed by law. However, you initially planned to repay all these debts.

Note that all of the above refers to a truly catastrophic situation. In other cases, you just need to look for opportunities for the fastest repayment of all credit card debts.

Use consolidation

The most common cause of credit card debt growth is too high interest rates. To get a smaller amount of debt, you should try to lower the rate. Then it will become easier to pay off such a loan. It is also advisable to remove the possibility of making the minimum payment. After all, in case of financial difficulties, it is very tempting to pay the minimum (but the debt practically does not decrease).

This can be done by making an “exchange” of your credit cards for one consumer credit in cash. You will need to take a new non-target loan, due to which to pay off debts on all credit cards and close them. The new loan will have a lower interest rate, but the repayment schedule will be tighter. The goal will be closer, and all the money paid will go to a real reduction in debts.

What exactly you can not do if you want to pay off debts on credit cards

You can not pay a minimum. After all, while your debts will remain at the same level, and all deposited money just go to the bank. Therefore, the minimum amount can be paid only in case of priority repayment of more urgent debts purposefully chosen by you.

You can not increase the cost of credit cards. You need to take turns to pay off debts on the cards and close them, making sure the full settlement. You cannot deposit any amount into your account, decide what is enough for now and continue to use this card for payments in stores! That way you will never cover all your debts. Stick to a pre-selected plan and follow the goal.

Savings are your assistant. A life without debt is possible, and every dollar saved will bring you closer to this goal. Therefore, use budgeting, keep track of all expenses, effectively save money. All this will help to solve financial problems faster.

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“Serious” debt is the amount of $ 50 thousand. At such a debt, the IRS will already have to provide the service with relevant information. According to the law, “unpaid, legally binding federal tax obligation” debt, the amount of which exceeds $ 50 thousand (plus accounting for a fine and interest), is considered a “serious offense”. The minimum amount of tax debt will change periodically – depending on inflation and the cost of living. Moreover, the total tax debt, rather than the annual period, is taken into account.

Tax debts do not fall into the category of “serious tax debt”, if they meet certain conditions:

• The payment was made in time, under an installment agreement, drawn up by the IRS.
• The payment was made on time, in accordance with the agreement with the Ministry of Justice or the Proposal for concluding a compromise agreement.
• When the innocent spouse is released from responsibility; division of tangible property.

When collecting due process, in order to collect the debt, it is necessary to file a request with Levy in a timely manner.

The State Department gives the non-payer 90 days during which he can take the following measures to avoid depriving the passport:

• Fully pay off tax debt.
• Find a compromise with the US Internal Revenue Service.
• Eliminate all errors in certification.
• When sending information to the State Department, the IRS must necessarily notify the defaulter in writing. The notification will be sent to the last specified address by regular mail.

The Tax Service informs the State Department when:

• The request was sent erroneously.
• The tax debt is partially repaid and is no longer critical.
• The tax debt is completely repaid.

If the taxpayer considers that the request of the IRS to the State Department is unreasonable, then in such a situation it is possible to apply to the US District Court or the Tax Court.

If a decision is made to cancel the passport, the State Department must notify the taxpayer. Prior to notification, the passport is considered valid.

In the event that a taxpayer needs to travel abroad, you need to contact the telephone number indicated on the notice CP 508C to find out the status of your passport. In other cases, you must call the State Department (National Passport Information Center number: 1-877-487-2778).

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Bankruptcy protection is available to you and most persons confronted with debts, through the filing of a bankruptcy petition.  Upon the filing of a properly formulated bankruptcy petition in the bankruptcy court, section 362 of the bankruptcy code permits the implementation of the automatic stay.

The automatic stay is a provision that protects a debtor or debtor in bankruptcy from at least temporary actions by creditors to collect applicable debts.  Included in the protection protected afforded by section 362 is most creditors must cease any lawsuits, foreclosures, actions to repossess property, garnish assets such as wages and bank accounts, and even the persistent phone calls and harassment displayed by some creditors.

There are limits to the protections afforded by filing bankruptcy.  Some creditors are exempt from the bankruptcy protections afforded by section 362.  Repeat filers of a Chapter 13 bankruptcy may have to take measures to either extend the automatic stay or even create or implement the automatic stay.

However, the filing of the bankruptcy usually extends such bankruptcy protections to the debtor.  For certain more aggressive creditors, our office will generally file a suggestion of bankruptcy subsequent to the filing of the bankruptcy petition.  Often, we will additionally send additional notices to certain creditors of the filing, to ensure that such creditors do not attempt any behavior that could be considered a violation of the bankruptcy protections.

If you are in need of such protection from a creditor or creditors, I can help.  My name is Jay Weller and I have practiced bankruptcy law in the State of Florida since 1993.  I have filed many thousands of bankruptcies which have given much needed protection and comfort to my clients, helping them avoid the loss of their homes, automobiles, assets, and other important properties.  Of course, if one loses his or her home or automobile to a creditor’s actions, such loss can go far beyond the loss of property.

If you are in need of bankruptcy protection then please contact a reputable attorney today.  Jay Weller may be reached directly through our website at www.jayweller.com or toll free at 1-800-407-3328 (DEBT).  Jay Weller will speak with and later meet with you directly in representing your case, and getting you the necessary protections from you creditors in order that you may begin your fresh start, free from creditor harassment.

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The United States Bankruptcy Code provides for five varieties of bankruptcy. Chapter 7 bankruptcy is often called a straight bankruptcy or liquidation. Chapter 9 bankruptcy is reserved for municipalities. Chapter 11 bankruptcy applies to either corporations or individuals whose debts exceed those permitted by a Chapter 13 bankruptcy. Chapter 12 is a form of bankruptcy reserved those engaged in the operations of a farming or fishing. Chapter 13 offers a reorganization of the debts of a wage earner. These forms of bankruptcy are referred to chapters because each is offered under a different chapter of the bankruptcy code.

The most commonly filed bankruptcy is Chapter 7. Chapter 7 bankruptcy is commonly employed by a debtor seeking to discharge or eliminate unsecured debts. Unsecured debts are obligations that are unencumbered by collateral. A credit card or a medical bill is generally an unsecured debt. A mortgage on a home or an automobile loan is usually a secured debt. The home or automobile serves as security for the loan. If one does not pay a secured debt obligation, the creditor may seek to recover or repossess the collateral.

Most individual debtors qualify for a Chapter 7 bankruptcy, with some exceptions. If the debtor’s median income as determined by his or her family size significantly exceeds the median income, the debtor may not be eligible to file Chapter 7.

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