|Image courtesy of David Castillo Dominici|
This is a post I am copying over from our Face Book page.
Many people are facing tough financial times during this pandemic.
Here’s How Badly The Coronavirus Has Impacted Americans’ Personal Finances by: SARAH HANSEN, Forbes Staff, Forbes.com
That’s the number of consumer loan accounts in forbearance, deferred payment, or natural disaster status as of May 31. At the end of April, just a month earlier, that number was 35 million...
That’s the portion of consumers who said they are refinancing their debt...
That’s the average budget shortfall American households are facing..."
As we emerge from this crisis, we will have many tough decisions to make on how to move forward. I am sure many people are already planning how to start their recovery.
Some people will think about taking money out of their IRA's or 401K's. I want to take a moment to remind people they do not necessarily need to spend down their retirement savings to make ends meet now. Under most circumstances, retirement accounts are protected in a bankruptcy case.
Also, as you set up a plan to move forward, consider how long the plan will take to complete. Many debt settlement plans, debt management plans, or consolidation loans are based on a multi-year plan. Paying minimum balances on credit cards can take decades.
What if after a year, the plan fails? Or a family takes another economic hit for another reason or a person miscalculates their ability to catch up? All the money the family put into the plan is gone and they find themselves where they started the year before. I find this common in my practice and that can be avoided.
Bankruptcy may be the best option. To file and complete a Chapter 7 Bankruptcy Case usually take months. A Chapter 13 Bankruptcy Case, which allows a debtor to pay what they can afford (as shown on paper), can usually take as little as 3 years and go on for as long as 5 years. The CARES act allows payments for up to 7 years. The key difference with a Chapter 13 payment plan is the Court and Trustee oversee the process and not the creditors. This helps to protect the debtor.
People should consider all the options as they plan their personal recovery from this crisis.
If you want assistance, legal representation, or just want to know more about me, Mark M. Medvesky, or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at www.whhmlaw.com.
We are working with clients via telephone, internet and video conferencing during this time. We are starting to accept office appointments as well.
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