With all of the business closures in New York due to the impact of the coronavirus, it’s not surprising that many people would consider filing for bankruptcy to deal with financial hardships. Taking this step can be a way to have a clean slate and erase debts, but making this decision requires knowing all of your options. Here are some important things that you should know about filing a bankruptcy in New York in the Covid-19 era.
New Procedures in Bankruptcy Courts
The court rooms in New York that hear bankruptcy cases are still functioning, but the processes and procedures have been modified to comply with public health concerns. Obviously, these modifications are on-going and vary, depending on the specific area, but here are some examples of the general changes that the New York Bankruptcy Court has made:
- Restricts access to all of the New York bankruptcy courtrooms by allowing only employees and other specified individuals to enter.
- Suspends all in-person bankruptcy appearances.
- Mandates that all scheduled hearings will be held over the phone.
- Encourages parties to file bankruptcy petitions electronically. But accepts paper filings that are mailed or dropped off in a sealed envelope.
- Authorizes a waiver of fees for public access to court electronic records for certain pro se parties.
Chapter 7 Bankruptcy
If you’ve been laid off due to Covid-19 and struggling with debt, you may opt to file a Chapter 7 bankruptcy. This form of bankruptcy eliminates most unsecured debts, including credit card debt and medical bills, and gives you a clean slate. The process is generally quick (3-6 months to finalize), but the pandemic has caused court delays.
An important thing to keep in mind is that you must wait eight years after the filing date of your first Chapter 7 case before you can file for another. This could be a risk because of the uncertainty of your financial circumstances during the pandemic. For instance, if you became infected with the coronavirus or another illness and you rack up a lot of medical bills, then you wouldn’t be able to file another Chapter 7 case right away.
Chapter 13 Bankruptcy
Another option for individuals and businesses is filing a Chapter 13 bankruptcy. Here, you don’t have the advantage of liquidation and you must eventually pay back your creditors; the repayment plans typically allow for about three to five years to get in line with the payments. This type of bankruptcy allows for the reorganization of a business, but this type of bankruptcy is based on businesses that are expected to be profitable. If that’s not the case, then there could be further problems down the line, especially when it’s difficult to gauge profitability during the coronavirus crisis.
Get Help with Your Bankruptcy Filing in New York
If you’re unemployed, laid off, have been furloughed, or are experiencing any other loss of income due to Covid-19, you’re probably concerned with the state of your finances and your ability to pay your bills. Although government entities and creditors have enacted measures to assist with financial woes, it might not be enough. If you’re considering filing for bankruptcy, you want to be aware of all of your options and the skilled New York bankruptcy attorneys at MOWK Law can help you assess your situation navigate New York bankruptcy in these stressful times. Contact us for more information.