Heather A. Harwell, Esq.
The No-Physical-Contact Chapter 7 Bankruptcy Process
In the wake of the Corona Virus | COVID-19, many people are experiencing financial hardship due to lay-offs, quarantines, additional expenses for health protection and grocery delivery and medical bills. Unfortunately, the current epidemic has not shown signs of ending soon. In the event that you are unable to financially recover, Chapter 7 Bankruptcy offers a fresh start. Even with “essential service” requirement and social distancing one may still file bankruptcy. Our office, as do many others, offer telephonic, Skype and FaceTime consults. Documents and questionnaires may be sent to you as the client via e-mail for electronic completion on a computer. Alternately, you could print off documents and use your phone to scan pictures of the pages to return to the attorney. If you have selected a bankruptcy attorney already, do not hesitate to ask him or her to offer no-physical contact options. Several documents will be needed for the attorney to prepare a Chapter 7 petition; which documents depends upon a client’s financial status, creditors and assets. Most necessary documents may be downloaded from the internet such as paystubs or bank statements by logging into an employee or bank account. The files may then be e-mailed to the attorney or uploaded to a secure cloud storage site like DropBox. Once the Chapter 7 petition is prepared, the client will need to review and approve the petition package (usually between 60 and 70 pages) and sign approval. Due to the Corona Virus, the US Middle District Bankruptcy Court is allowing electronic signatures for approval. The required pre-filing credit counseling and post-filing financial management courses may be taken on line as well. After a Chapter 7 petition is filed, the Bankruptcy Court issues a Notice of Schedules which contains the date and time for a scheduled “341 Creditor’s Meeting” approximately 45 days out. The 341 Creditor’s Meeting allows the bankruptcy trustee and creditors to ask questions regarding the client’s financial status. The bankruptcy trustees have been allowing telephonic attendance at these meetings by use of a provided number and password. If all goes well, you will not need to take any further steps and a discharge will be issued within 3 to 4 months.
Allow Time to Consider Your Options
Although a job lay-off or medical bills may cause one alarm, the best thing to do is give your situation a little time. If you have lost your job, consider temporary alternatives for employment providing an essential service if you are physically able or a work-from-home alternative. Use your savings and income for necessary items like food, rent and prescriptions and worry about your credit cards in a month or two if you are not able to make the minimum payments. Chapter 7 Bankruptcy should be reserved as the last resort; once you file, you will generally not be able to include additional bills that arise after the filing and, if a discharge is granted, you will not be able to file another Chapter 7 Bankruptcy for 8 years.
Generally, your financial decisions are going to rest upon how long it takes for the Corona Virus epidemic to subside. No one may predict how long the Corona Virus epidemic will last but the World Health Organization is a good source for information and status updates. (https://www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports). The CDC website also offers information on coping with the stress caused by the epidemic at CDC.gov. In the interim, try to enjoy the down time with your family, use the quiet time to formulate alternative financial plans depending upon how your situation evolves. When and if you become ready to file for Chapter 7 Bankruptcy, be confident that you will be able to do so without jeopardizing the health of you or your family.