The coronavirus pandemic has devastated the United States economy. The most recent data from the Labor Department indicates that 22 million workers have filed for unemployment benefits. The stark reality is bleaker. This number fails to account for those who are either underemployed or gig workers who have lost their jobs. In an economy that has previously been praised for its record shattering employment statistics, the most basic necessities—food, shelter and medical care—are at risk. Many people feel as if they are drowning with no hope of being saved. One viable option is filing for personal bankruptcy.

Our society stigmatizes bankruptcy. Whether it be the disdain of friends and family or the difficulty of obtaining future credit, many people hold off filing for bankruptcy when it can be the best alternative. Experts anticipate a significant increase in the filing of personal bankruptcies in May and June of this year. If you are one of the millions of Americans falling deeper into debt, filing for bankruptcy may be your best option. Chapter 7 and chapter 13 bankruptcies are the most common programs utilized to reduce or eliminate debt. Chapter 13 is referred to as “reorganization bankruptcy” and involves the creation of a court-mandated repayment plan. A chapter 13 bankruptcy may enable you to keep some of your assets and, after you complete the repayment plan, have debts discharged. This article will discuss the more common type of bankruptcy that people will file—Chapter 7.

A chapter 7 bankruptcy , also known as a liquidation bankruptcy, involves selling anything valuable--including a vacation home, a second vehicle, collectibles, stocks and bonds—in order to repay your debts. In general, this bankruptcy eliminates the majority of debt once a judge approves your filing. It is important to note that it does not discharge all debt. Domestic support arrearages, newly acquired tax debt and student loan balances are some examples of what cannot be eliminated. Luxury items, such as a vacation home, expensive jewelry or a valuable coin collection must be sold.

Filing for Chapter 7 bankruptcy does provide substantial benefits. You will retain the property where you work and live, which is the primary concern for most people. The entire process generally involves 3-5 months and is best suited for individuals who cannot repay all, or even a substantial portion, of their balances. Should you have an unmanageable amount of unsecured debt such as medical expenses or credit card purchases, Chapter 7 may prove to be the optimum option. The sooner you file, the quicker you will be able to reinstate your credit.

In order to qualify for a Chapter 7 bankruptcy, you must take the “means” test . To qualify under the means test, your income must be at, or below, the median income for your state. Two exceptions exist:

• If most of your debts are business-related, you will be exempt from the means test.
• If your gross income is too high, you may qualify using the second portion of the means test, which allows you to deduct certain expenses.

A majority of the population is currently overwhelmed. People struggle to obey the “stay at home” orders, homeschool children, attend to younger children, manage their households and

grapple with ever-mounting debt. People who remain working at a physical location, are required to take additional health and safety measures. Employees working at home deal with the challenges of working in a remote environment. Filing for chapter 7 bankruptcy offers some of the following benefits:

• Debt forgiveness: Through a Chapter 7 bankruptcy, you can repay creditors quickly or discharge the majority of your debt. You can eliminate debts like credit card balances, personal loans and other forms of unsecured credit.

• Relief from creditor harassment: When you file for bankruptcy, the judge implements an automatic stay on creditors, which prevents them from contacting you or repossessing your property.
  

• Home and personal property exemptions: Filing for Chapter 7 doesn’t require you to sell all of your possessions. You may be able to retain your home and certain household goods.
  
  
• Assistance with your home: If you are facing foreclosure, Chapter 7 will not erase the debt, but it may provide the time needed to restructure your finances.
  

Despite the fact that many Americans feel desperate and fearful, correct decisions involve knowledge and an understanding of all options. Filing for personal bankruptcy may be the optimum route. Should you be facing increased debt and/or decreased income, speak with a knowledgeable bankruptcy attorney. For a free consultation, contact Ms. Haven Del Pino of the Del Pino Law Firm at (305) 362-6277 .