Laid off due to COVID-19? Bankruptcy Could Help

Have you lost your job or been laid off due to COVID-19? If so, you’re not alone, as unemployment rates have mushroomed in the past year. Federal legislation in the CARES Act increased unemployment benefits and sent economic stimulus payments to Americans, but was that enough? While we welcome stimulus payments, they don’t cover bills month after month, and few families can live on unemployment benefits alone. Furthermore, these benefits do not offset the financial and emotional costs of a job loss.

As small businesses across the country have closed their doors, millions of Americans have filed for unemployment benefits since March 2020. Many workers have tried to find even part-time work, while many affected by COVID-19 or other illnesses have gone on medical leave or been unable to work.

After filing for unemployment, finding a new job costs time and money. Hiring managers are often reluctant to consider workers with gaps in their resumes. You will spend dozens of hours on the job search:

• talking with your career coach (if fortunate enough to find one)
• finding potential jobs through online searches or local newspapers
• polishing your resume
• writing cover letters
• filling out applications
• interviewing (if you’re a lucky one who gets a call)

All of these hours spent represent days and weeks without an income. They become an investment in your future and the possibilities it holds. However, as you search, the debts keep adding up and growing.

Protecting Yourself & Your Family after getting Laid off Due to COVID-19

It’s not too late to protect yourself, your assets, and your family from mounting debt if you’ve lost your job or been laid off due to COVID-19. Bankruptcy may be an option to provide you with breathing room. Bankruptcy offers legal protection for people who need to rebuild their lives after a crisis. Filing for bankruptcy is not an admission of defeat. Instead, it is a declaration that you take your financial responsibilities seriously and are willing to do what it takes to move forward from the coronavirus pandemic.

Before considering bankruptcy, though, be sure to consider other options for financial recovery. Bankruptcy should be your last resort. The U.S. federal government and the State of Maryland have resources to help pay some types of expenses. Private charities might be able to assist.

Bankruptcy is a powerful tool for debtors, but it can lead to a loss of assets and a long-term reduction in credit for you, the debtor, and others who have cosigned on debt with you. You may be able to negotiate a payment plan with your creditors.

If these options do not work, you may consider bankruptcy if you’ve lost your job or been laid off due to COVID-19. Two types of bankruptcy help individuals in different financial circumstances. Chapter 7 bankruptcy involves liquidation of your assets under the oversight of a trustee, with the liquidation proceeds going to pay off your creditors. Chapter 13 bankruptcy protects your assets and allows you several years to reorganize your assets, recover financially, and repay the debt.

To qualify for bankruptcy protection, you may need to meet a means test and other requirements, including whether you work for the Federal government with a certain wage. These may be different in Maryland than in other parts of the country.  You might face a requirement to attend credit counseling or a course in financial management in some cases.

Before filing for bankruptcy, be sure to understand your rights as well as the financial consequences of your decisions. An attorney should guide you through the process.

Seek Legal Advice From a Bankruptcy Attorney

At the Phillips Law Offices, LLC, in Greenbelt, MD, our legal team has extensive bankruptcy litigation experience. If you’ve lost your job or been laid off due to COVID-19, we are available to help you and advocate for you—but please don’t wait until it is too late. Make a phone call to the Phillips Law Offices at 781-595-3800 today for a free consultation with a member of our knowledgeable team. We will work with you to get you back on your feet financially.