Updated: 2020-06-22 by
The Coronavirus shutdowns have thrown many people into economic peril.
Many writers have written about how people can use bankruptcy to may play a role in prudent financial planning in the months ahead.
- Liz Weston: Start thinking bankruptcy now, not later (Thu, May 7, 2020. Don’t wait to talk to a bankruptcy attorney. don’t touch your retirement money. Don’t let cash pile up. Don’t sell stuff. Don’t pass up forbearance options.)
- Here’s what you need to know if you’re considering filing for bankruptcy because of coronavirus (CNBC - Thu, Apr 16, 2020 (“Bankruptcy should be the very last resort, but especially now during the Covid-19 crisis,” Jack Gillis, executive director of the Consumer Federation of America)
- But see 10 Things Personal Finance Bloggers Need To Get Right About Bankruptcy (Cathy Moran - Bankruptcy Soapbox Blog- "Bankruptcy is an option to be considered alongside other debt options, from the beginning. While bankruptcy is not to be used lightly, it is not a last resort.")
- NPR/Talk of the Nation: Sometimes, Filing For Bankruptcy is Best - (April 20, 2009. Jane Bryant Quinn explains why it makes sense to go bankruptcy to preserve your retirement accounts and other exempt assets. Know your rights!)
- The New York Times: Debt Settlers Offer Promises but Little Help (April 19, 2009)
- The Chicago Tribune: In this economy, bankruptcy may be an answer for many (March 15, 2009)
- The New York Times: Bankruptcy as a Step to Solvency (Jan 23, 2009)
- Credit Slips Blog on "Should I File for Bankruptcy" (Jan 23, 2009) ('rules of thumb' about when it's appropriate to file).
However not every recession is the same, and this one has a ways to go. No one knows yet the long lasting economic impact of this pandemic.
But as stimulus packages lapse and moratoria end, there may be a time when bankruptcy is the only safety net left. So it doesn't hurt to understand how it works, and what you can and can't do, and should and should not do, in the year before you file.
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Consumer bankruptcy filing reached a 34 year low in 2020, because forbearance and other programs prevented the normal collection efforts, like wage garnishment and foreclosure, which are the things that usually prompt people to recognize how dire their situation is, and then file. Whether the timing for filing for bankruptcy is now or later, the time to talk to a bankruptcy attorney IS NOW, so you can take full advantage of the financial protections that bankruptcy law can provide, and avoid common financial mistakes in the year to 18 months before filing, that may cause you to lose assets you could otherwise keep in bankruptcy.
Can bankruptcy help stop an eviction? Well, it can delay it, for an extra month or two, in some cases, in some states, if you file early enough in the eviction process. And bankruptcy can be part of a broader financial strategy to keep a roof over your head. But you'll want to see a lawyer sooner rather than later to take full advantage of your options.
What We're Reading about Bankruptcy, Debt and Credit. Timely, useful articles, from reliable sources.