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COVID-19 & Your Bankruptcy: Insights, Resources, and FAQs

The Governor of Michigan issued a “Stay Home, Stay Safe” order that prohibits all businesses and operations from conducting in-person services, with certain exceptions. Individuals and families must stay home except for essential activities, such as going to the hospital, going to the grocery store, or working within a critical infrastructure workforce.

While this order requires Goldstein Bershad and Fried, PC to suspend in-person services, we are doubling our efforts to provide our clients and community with indispensable legal support. We understand the pandemic may have physical, social, and financial consequences for you and your loved ones, and we are here to provide the insight and guidance you need during this global crisis. The following is a compilation of informational resources, as well as an FAQ section about COVID-19 and your bankruptcy case.

Latest COVID-19 Updates

Finding reliable information can be a challenge, but it is of the utmost importance. Be sure to fact-check as much as possible and depend only on valid sources, such as:

Health organizations and government websites will provide the most reliable information about safety guidelines, statistics, and projections.

Frequently Asked Questions About COVID-19 & Bankruptcy

The pandemic has affected not just public health and the economy but also our legal system. To limit the spread of the virus, courts throughout the nation have adjusted operations and adopted temporary policies. Here are answers to the most common questions we have received about COVID-19 and bankruptcy.

Are bankruptcy courts still open?

Fortunately, the courts are still handling bankruptcy cases, and it is not too late to file if you haven’t begun your process. If you’re in an open bankruptcy, the proceeding will continue. However, the courts have largely suspended in-person services. Depending on your local court, you may need to file electronically and attend virtual hearings. Courts have relaxed signature requirements as well, meaning you can most likely submit electronically reproduced (i.e. faxed, photocopied, scanned, etc.) signatures on original documents.

Should I expect delays in my case?

Yes. Every court is responding differently to the pandemic, but we recommend getting started as soon as possible to compensate for longer wait times.

Will delays affect my automatic stay?

No. As long as your case isn’t dismissed, your automatic stay (i.e. prohibition of all collection actions) should still be in effect. The court will notify your creditors of delays, so you will not need to contact them yourself.

If I get a stimulus check, will I need to include it in my income calculations?

Per the Coronavirus Aid, Relief, and Economic Security (CARES) Act, you will not need to include your stimulus check-in your Chapter 7 means test or Chapter 13 disposable income calculation. This provision allows you to use any COVID-19-related federal payments without fear of becoming ineligible for bankruptcy or having to include them in your repayment plan.

I filed Chapter 13, but I lost income because of COVID-19. What should I do?

The CARES Act allows individuals in open Chapter 13 cases to modify their repayment plans if they suffer financial hardship due to COVID-19. You may be able to extend your repayment plan by 2-4 years, thus lowering the monthly payments.

I am a small business owner, and I need to file bankruptcy. Do I have to liquidate my business through Chapter 7?

No. You may qualify for Subchapter V of Chapter 11 bankruptcy, created by the Small Business Reorganization Act of 2019. This is a streamlined and cost-effective form of bankruptcy exclusively available to small business owners. When it originally took effect, you could only qualify for Subchapter V if you had less than $2,725,625 of debt. The CARES Act, however, contains a 1-year sunset provision that raises this threshold to $7,500,000.

Schedule a Free Consultation to Discuss Your Options

If you have additional questions or concerns, our team at Goldstein Bershad and Fried, PC is fully prepared to assist. We can schedule a remote consultation to analyze your case and help you assess all options at your disposal. We understand how stressful this crisis may be for you and your loved ones, and we are committed to helping you overcome all legal and financial challenges.

For information, resources, or one-on-one support, call (248) 213-7888 or contact us online today. We have 100+ years of combined experience, and we are ready to put that experience to work for your future.

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