Top 5 Questions and Answers About Debt & Bankruptcy Presented During LawChamps' May Meet-Up

Top 5 Questions and Answers About Debt & Bankruptcy Presented During LawChamps' May Meet-Up

Monzerrath Ortiz
 | 

In response to the COVID-19 pandemic, LawChamps began hosting monthly virtual Legal Meet-Ups to help people get advice from real lawyers on pressing legal topics. The Meet-Ups are run in a panel format, mediated by LawChamps' Chief Legal Officer Jennifer McGlone who asks the panelists questions submitted by you, our LawChamps users.

 

The first legal meet-up was held on May 8th and was attended by around 250 people across the United States. 

 

Seven LawChamps lawyers participated as panelists.

 

Bradley Bailyn, Eafon Cobb, Lou Russo, Patricia De Fonte, Neil Opdahl-Lopez, Michael Neumann, and Bowen Klosinski discussed topics ranging from debt and bankruptcy issues to unemployment.

 

Covering the topics of debt, bankruptcy, and mortgages was attorney Bowen Klosinski from Klosinski Overstreet Attorneys at Law, which operates in George and South Carolina. Mr. Klosinski offers expertise in several areas of law including Real Estate, Bankruptcy, Civil Litigation, Construction, Evictions, and Business Transactions.

 

During the COVID-19 pandemic, when the country is facing record unemployment and loss of income, much of the Meet-Up focused on debt and bankruptcy issues, such as credit card debt and filing chapter 13 bankruptcy. Here are Mr. Klosinski’s answers to the top five debt and bankruptcy questions presented during LawChamps' May meet-up:

 

1. Why didn’t I get my stimulus check? Do I need to apply for it? I thought it would be deposited into my bank account automatically? 

This depends on a few factors: 

  • Are you eligible? 
  • Did you file taxes from 2018-2019? 
  • Who did you file with? 
  • Did you receive your tax refund via direct deposit? 

Some checks are being deposited through the bank account that you use to receive your tax refund, and some stimulus checks may still be in the mail. 

You can go online to the IRS and see if your address and bank account information is correct and updated. 

Other than that, you may have to check with who you file your taxes with. 

2. Should I use my credit cards for living expenses if I lose my job? 

That is going to be dependent on what everyone's situation is. If that's the only thing you can live on right now and you're not receiving an unemployment check, then you don't have another option. 

After we can get back into employment, if that credit card debt has reached the limit to where you don't think you can pay it back at a reasonable time, then you can look into a chapter 13 bankruptcy. 

Chapter 13 bankruptcy will allow you to pay back your credit card debt over a period of 5 years, and that's not only credit card debt; if you have a car loan you can expand that car loan out for another 5 years. 

Similarly, if you were behind on your mortgage, the arrearage you build up and your mortgage when you file a bankruptcy can be paid over the next 5 years. That's the benefit of what a chapter 13 bankruptcy will do for you. 

When you get back into employment, if you are looking into a chapter 13 bankruptcy, discuss your options with an attorney to figure out what you need to do. 

3. Should I pull money from my IRA or 401K or should I borrow against it? 

Again, that's going to be dependent on what you are comfortable with. 

If you decide to pull money from your IRA, it kind of hurts you on the back end because it affects how prepared you will be in the future when you need to retire, and has penalty fees. 

If you feel that you need to do that and will be able to replace that money at a later time, then maybe go with that option. 

If you feel confident in borrowing against it-- so that if you do default later, they just come and grab the money out of the IRA account-- then go with that option. 

Ultimately, it’s a comfortability question. 

4. If my LLC filed for bankruptcy due to COVID-19, will that impact my personal credit?

No; your personal credit will not be impacted. 

5. My car loan company sent a negative report to the credit bureaus for missed payments during the COVID-19 shelter in place. What can I do? 

What I've understood is that these lenders and creditors are not allowed to send negative credit information during this time, but that is only if you have called them to work out a particular agreement. 

Whether that be forbearance or loan suspension payments, if you didn’t take the steps to call them and didn't pay them, they can report that negative information. 

That’s where this all comes back to; you need to speak to your lenders and creditors if you cannot make the payments right now. 

Everyone across the country is experiencing the same things, so they have set plans for your situation. 

Practically speaking, if you find yourself in a situation where you can't pay your rent or your car loan, or you can't pay back a debt, the first step is to make a good faith effort to approach the lender Directly. 

Put it in writing and see what programs are available to you. That is possibly the best thing you can do to avail yourself of the protections that are there for you right now during the COVID-19 pandemic. 

 

 

If you would like to learn more, an excerpt of the transcript covering debt and bankruptcy issues is available here.

 

The next LawChamps' Legal Meet-Up will be held via zoom on June 26th. To sign up and submit your questions, visit our website or call us at 866-653-3017.

 

This article is intended to convey generally useful information only and does not constitute legal advice. Any opinions expressed are solely those of the author, not LawChamps.

Monzerrath Ortiz

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