Should You File Bankruptcy Now?

Should you file bankruptcy now if you have lost all or part of your income because of the coronavirus pandemic and can’t pay your debts?

If you have gotten over your head in debt because you lost income due to the coronavirus, bankruptcy might be the solution for you. You could eliminate many debts with a chapter 7 bankruptcy, usually without paying anything for them. However, you should carefully consider the timing of filling bankruptcy.

Bankruptcy only discharges debts that exist when you file the bankruptcy case.  If you were to get the coronavirus and incur large medical debt after you filed bankruptcy, you would still owe that debt.  While President Trump has proposed using Medicare to pay medical expenses for some people who contract the coronavirus, this proposal does not seem to cover anyone with health insurance.  Additionally, the program has not been finalized.  So you may still be on the hook for some or all of these expenses if you were to file bankruptcy now.

If you have debt that you cannot afford to pay because you lost your income in the current crisis, you might be better off waiting until the pandemic is over before filing bankruptcy.  This is a personal decision, and if you’re in danger of having wages garnished, money taken out of your bank account, or a lien placed on your house, you have to weigh the pluses and minuses of filing bankruptcy now or waiting until the pandemic is over.