The Virginia Federal bankruptcy courts have altered their operations to protect and insure the safety of the public. They have been closely monitoring and following the guidelines from the CDC and local public health officials. However, if you have filed for bankruptcy, you will still continue to be protected from creditors. Main Street Law remains open and operating as normal. Our office is happy to assist you with filing a Chapter 7 or Chapter 13 bankruptcy case during this trying time. We have implemented additional protocols to ensure client safety and have provided this blog as a resource to hopefully answer some of your frequently asked questions. *For the latest news about your specific court, visit your court’s website.
Can I still file for bankruptcy if the courts are closed?
Yes. The courts are still operating, but with slightly different protocols that your attorney will review with you. Unless told otherwise you will not visit the courthouse during the crisis. All hearings and trustee meetings are being conducted telephonically. Do expect some delays. Even though the courts are operating, they may be doing so with limited staff. We ensure that we will work with you to get your case filed in a timely manner and to meet any deadlines set in your case. This includes documentation deadlines, payment due dates, course submissions, etc. You do not want to have your case dismissed for missing a deadline.
CARES Act & Other Federal Relief Payments.
The coronavirus has resulted in temporary changes to bankruptcy rules under the federal Coronavirus Aid, Relief, and Economic Security Act. Below is a brief overview of the types of relief made available by the act that would likely benefit some of our clients.
Stimulus funds were given to individuals that earned less than $75,000 annually. These individuals received a one time payment of $1,200 and couples making less than $150,000 annually received a total of $2,400. This also included $500 per child, if eligible.
Unemployment benefits for those eligible included payments of $600 a week from the Federal Government for several weeks. Those that are self-employed are typically not eligible for this unemployment insurance. These changes will only last for a year, expiring March, 2021.
*Please note payments under federal law resulting from the pandemic, such as pandemic unemployment assistance and stimulus checks, will not count as current monthly income for debtors looking to file a Chapter 7 case. These payments will also not be considered disposable income for debtors looking to file a Chapter 13 case.
To read more about the CARES Act visit https://home.treasury.gov/policy-issues/cares.
341 Trustee Meeting
Debtors who file a Chapter 7 or Chapter 13 bankruptcy case have to attend a meeting of creditors under Section 341 of the Bankruptcy Code. Due to the federal court being closed to the public, the U.S. Trustee program requires that these meetings be conducted telephonically until further notice. Your attorney will prepare you for your meeting with the trustee assigned to your case, and your attorney will be present on the telephone conference line with you during the meeting.
Decrease in income due to COVID-19
We understand that with so much uncertainty surrounding the Coronavirus pandemic, many are worried about their financial stability as well as how to pay off debt due to a decrease in income. Depending on your particular situation, there may be some relief to get you through this tough time (see above, CARES Act). Consider Programs that might extend unemployment insurance and certain loan programs. As an example a repayment plan can be extended to seven years. However, this is only allowed for clients that have already filed a case with confirmed chapter 13 plans. This modification requires notice and a hearing at which the debtor must show documentation of financial hardship resulting from the COVID-19 crisis. It is important to remember that filing a bankruptcy may allow you to eliminate certain debts such as credit cards, loans, medical bills, etc. but it wont change that you will still be responsible for rent, utilities, insurance, and all other ongoing living expenses. It does not change your income. Talk with one of our experienced attorneys about whether or not it is a good time for you to file bankruptcy!
How does this affect my current Chapter 13 case?
We are providing the following information as a general guideline for all clients who are currently in a chapter 13 payment plan:
If your income decreases substantially due to layoffs or other factors in the next few weeks or months, you may be eligible for a temporary reduction in your chapter 13 payments. In order to reduce the payments, we need to do a new plan for you and we need proof of the decrease in your current household income as well as updated monthly household expenses. Please keep in mind that, if you do request a plan with a lower payment for a period of time, in most cases, you will then have to increase the payment later on in order to successfully complete the case so it is not a good idea to reduce the payment unless it is absolutely necessary.
The courts are aware of the situation and are doing their best to allow people the chance to be successful in their cases while weathering these unpredictable and stressful times. The judges are continuing to sign orders as needed and we are continuing to file cases and all motions and other pleadings necessary to competently assist our clients.
Please feel free to contact our office with any questions. Email is the fastest and easiest way to reach us. (firstname.lastname@example.org ) At this time we have no plans to close the office but we may, at some point, decide that staff will work remotely in order to comply with the national recommendations to keep social distance and, if this happens, email may be the only way to reach us for a period of time. Rest assured that even if we are working remotely and the office is closed, we will still be in communication daily with any clients who send us questions or request assistance with any matter regarding a case.
We wish all of you good health and success in getting through the next few months.