Problems created by the current pandemic are pushing up bankruptcies and the legal questions that arise as a result are matters of increasing importance for those affected by financial hardship.
As has been recently reported in the New York Times, the ‘Great Lockdown’ has seen the United States with the highest household debt in history, along with stagnant incomes for most and an increasing trend for people to live on a hand-to-mouth basis in terms of income.
However the government’s stimulus package that commenced in April has meant that there has been a drop in bankruptcy filings, but only due to the package which in some cases has created a greater income (currently) for the unemployed than they enjoyed before.
As at mid-June, the Government had issued nearly $270 billion worth of stimulus payments to some 160 million people. Unemployment benefits, which normally average about $340 a week, were temporarily increased by $600 a week.
And so economic pain lies ahead. Bankruptcies and severe financial hardship as the economy struggles to deal with the deep recession coming following the COVID crisis.
The banking industry is already gearing up for a wide range of defaults on everything from mortgages and consumer debt to credit card debt. Several of the biggest banks in the United States, including JPMorgan Chase, Wells Fargo and Citigroup, said in their second-quarter earnings reports that they had added tens of billions of dollars to their reserves to cover losses they expect to incur on business and consumer loans.
All of which means that when individuals are unable to pay their bills they will need to take professional advice from a bankruptcy attorney who has experience in handling such matters and can ensure the appropriate steps are taken to make a difficult situation easier to navigate.
A trained attorney will be well versed in bankruptcy law. They can make sure that all of the necessary paperwork is filled out and they can tell you if you are actually broke enough to file for bankruptcy. However, there are a lot of lawyers out there, and choosing one can be a vexing task.
There are however some key questions that anyone seeing a bankruptcy attorney should ask before hiring them.
Five of them are listed here –
Have you ever had to handle a trustees’ objection and what was the outcome?
If your Chapter 7 bankruptcy is successfully discharged, you will still owe your creditors money, but they cannot try to collect it from you or sue you for it. A Chapter 13 bankruptcy requires you to make a plan to pay back your creditors albeit very slowly.
Banks and other lenders are often no shows to the meeting of creditors that takes place before a bankruptcy is discharged. However, sometimes a United States Trustee will object to a Chapter 7 bankruptcy. They might believe that a person makes too much money and should file a Chapter 13.
Make sure to ask your attorney how they would handle the situation if someone objects. The lawyer you hire should have a plan for defending you if this circumstance should arise.
What will my payments be under Chapter 13?
If you are filing a chapter 13, you will want to ask your attorney approximately what the total cost of your monthly payments will be. An experienced attorney should be able to give you an estimation.
Under Chapter 13, people have three to five years to resolve their debts while applying their disposable income to debt reduction.
The option permits applicants to eliminate unsecured debts while catching up on missed mortgage payments. One of the more attractive features is being able to short-circuit home foreclosure, although this can mean living under the supervision of a court-appointed trustee who will collect and distribute your payments.
Will I be able to keep my property?
If you own a home or a car, you will want to ask your attorney if you will be able to keep them. They should be able to figure this out based on what kind of bankruptcy you want to file, what you owe, and the value of your property.
Filing a Chapter 13 petition suspends any current foreclosure proceedings and payment of any other debts owed, which buys time while the court considers the plan, but it does not eliminate the debt. Hopefully, the bankruptcy plan will free enough of your income that you’ll be able to make regular mortgage payments and keep your house.
What will the total cost of my case be?
You have probably seen many ads on television offering a free consultation with a bankruptcy attorney. Unfortunately, they are not free if you actually hire them. Make sure to ask exactly how much everything will cost all together including the filing fees and their flat fee for representing you.
Do you think I will pass the means test?
If a bankruptcy lawyer is worth hiring, they will be able to tell you if you should file for bankruptcy in the first place. The means test determines if you can file for bankruptcy. Your lawyer should be able to take a look at your pay stubs and bills during your first consultation. They should also ask you if your income may change during the six months or so it takes to complete bankruptcy.
If you make under the median amount of money for the size of your household in the state of New Jersey, you will be exempt from the test.
The decision to file for bankruptcy is a hard one. Choosing the right attorney can be critical to getting back on your feet and moving on with your life.
Article Source: Torres Legal, New Jersey attorneys