The daily news feeds us a steady diet of doom and gloom. People are dying from coronavirus or shut in their homes, hoping to avoid catching the disease. Businesses are closed, some for good while others hope to recover – someday. People who were already in financial distress now may find themselves forced to look for a way out. During our current turbulent times, COVID-19 bankruptcy may become a reality for many North Carolina residents.
Common Causes of Bankruptcy
Of course, people file bankruptcy because of overwhelming debt. We need to look at what causes the debt, including the following common reasons people declare bankruptcy:
- Medical Expenses
- Job Loss
- Poor or Excess Use of Credit
- Divorce or Separation
- Unexpected Expenses
Any one of these issues could cause you to lose control financially. However, the coronavirus pandemic set up scenarios where people could be hit with multiple setbacks outside of their control.
COVID-19 Bankruptcy Triggers
Whether you catch the coronavirus or not, the COVID-19 emergency could have a strong impact on your finances. In fact, most of the common causes of bankruptcy listed above could be triggered or at least worsened by COVID-19 aftereffects. Let’s look at how COVID-19 affected each of the causes listed above.
- Medical Expenses. As of September 4, 2020, more than 174,000 North Carolina residents tested positive for COVID-19. Almost 3,000 people have died. Testing costs and medical expenses could send many people to bankruptcy court.
- Job Loss. Every day, we hear of corporations filing for bankruptcy because they are unable to withstand lengthy shutdowns and government restrictions. The disruption of supply chains, combined with fearful consumers, dealt many companies a potential knockout punch. As corporations fall, their employees face layoffs and termination. Thanks to COVID-19, bankruptcy may become a necessity for many people.
- Poor or Excess Use of Credit. People who overspent before the coronavirus pandemic may now find themselves with increased medical costs, unusual living expenses, and decreased income. It’s unlikely that creditors will stop calling, so a COVID-19 bankruptcy may be the best way to get a fresh start.
- Divorce or Separation. Forcing married couples to spend 24/7 with each other is not always healthy for a marriage. COVID-19 may cause a spike in divorce and legal separation. Sometimes people ending their marriages also want to get out from under an overwhelming burden of debt by filing bankruptcy.
- Unexpected Expenses. Here, again, staying home can increase some of your expenses. Commuting costs may go down, but utility bills, food, and at-home entertainment may spike. When faced with unexpected expenses caused by COVID-19, bankruptcy may be the path to future financial stability.
Since COVID-19 is still present, realizing its long-term financial effects is challenging. However, if you find yourself financially overcome by COVID-19, bankruptcy is something to consider.
Is a COVID-19 Bankruptcy in Your Future?
Sometimes you can see a bankruptcy coming long before it becomes necessary. However, the current public health emergency placed people in financial jeopardy, often without much notice. Filing a Chapter 13 bankruptcy may give you the hope to carry on. We can help you decide whether bankruptcy is the right option for you.
Attorney Leslie Craft has the experience you need to deal with bankruptcy and traffic violations. Ms. Craft’s goal is always to help her clients get past their legal problems and get on with their lives.
To schedule a free personal consultation, call Craft Law Offices at (252) 752-0297 or email us at firstname.lastname@example.org. My offices are located in Greenville, Morehead City, and Rocky Mount for your convenience. I also represent clients in surrounding Eastern North Carolina communities, including Warrenton, Elizabeth City, Roanoke Rapids, Goldsboro, and Jacksonville.
Bankruptcy Doesn’t Have to Be a Painful Process.