Perhaps as you read the headline to this blog post, you might have asked yourself: “How in the world could the corona virus and bankruptcy be connected in any way?” My answer is that our bankruptcy system will be crucial in assisting the citizens of our country in recovering from the economic fallout of the corona virus.
Over the past few weeks, the Dow Jones Industrial average has dropped about 12 percent. Personally, I think it is going to drop a lot more. I would not be shocked to see it drop to 16,000 before the year is over.
Many medical experts say that the corona virus may take as long as 3 weeks to full recover. What is going to happen to the average American worker who has to miss 3 weeks of work? Most Americans don’t get paid when they miss work. I think the problem will be compounded for those of us who have children. When a child contracts Corona at a different time, this may add to another 3 weeks of being out of work. For many households, mortgage payments and car payments are going to get missed.
What is going to happen if you live in an area that is quarantined for 4 weeks? Can you work from home? What will happen to the people who cannot?
Furthermore, as this economy comes to a screeching halt because of the corona virus, layoffs are going to take place. Even if you have a super human immune system, you most likely will still be affected by the economic fallout.
Eventually, the corona virus cycle will end and we will all bet back to work. This is when I think Chapter 13 is going to be crucial in helping people recover.
When a person falls behind on house or car payments, Chapter 13 is a great tool to help catch those payments up. For example, let’s say a person misses 3 months of work because of sickness or layoffs. In Georgia, a mortgage company can start foreclosure over just one mortgage payment. However, in almost every case, the mortgage company will wait at least 3 months. The mortgage company has to advertise the house in the foreclosure section of the legal organ for the county in which the house is located for a period of 4 consecutive weeks before the foreclosure date. With Chapter 13, we can create a plan to catch up the house payments and stop the foreclosure.
We can do the same things for cars. If a person is being threatened with car repossession, Chapter 13 can stop the repo and allow a person to pay for the car through the Chapter 13 plan.
For a person who might get overloaded with medical bills, Chapter 7 will be an option. With Chapter 7 bankruptcy, you can eliminate all of your unsecured debt if you qualify.
The bottom line is that we will get through this crisis and live for a great future. Don’t give up hope.