Published On: May 9, 2020

This is a difficult time for everyone – employer, employee, parents, and seniors.  Never decide to do something without understanding the consequences of those innocent actions.

bankruptcy and COVID

We all know it is important to plan ahead.  It cannot be more important than today.  Many of you lost your job or were furloughed, but almost everyone has a change in their income, some more dramatically than others.  Unfortunately, the bills continue to arrive.  It is very important to know what you should and should not do to re-start your financial life after COVID-19, however long this takes.

Ask questions today, not after you make mistakes that cannot be fixed.

People try to solve problems on their own (like the homeowner who does his or her own plumbing repair, only to pay thousands of dollars later to fix, what would have been, a simple problem).  Most people see bankruptcy as a last resort.  But what is that based on?  Usually, it comes from their gut or statements of others.  This is the same as taking medical advice from a neighbor, the janitor.

My point – talk to an experienced bankruptcy attorney to understand your choices (this discussion is probably free).  Ask about the options to pay your bills.  I don’t suggest you rush to file a bankruptcy.  Instead, I suggest you have a game plan to avoid bad decisions.  In my experience (helping people with their debts since 1991) I found those who received expert advice at the beginning of their financial problems are in better shape than those who don’t ask for advice from competent bankruptcy attorneys.

If bankruptcy is in your future, many issues must be taken care of before jumping in. 

bankruptcy and COVIDTiming is everything.  Have you paid family?  Have you transferred assets?  Do you expect a tax refund?  Do you rent?  Are you behind on your mortgage?  Do you want to move out of Arizona?  Are you getting divorced or married?  Do you pay education expenses for children over 18?  There are usually hundreds, if not thousands, of questions that must be answered before you have a solid plan for your future.  Any attorney you talk to must be willing to explain all these issues, plus more.  Don’t tolerate lazy or distracted attorneys.

Bankruptcies will increase as a result of COVID-19.  Who you choose to help you in the bankruptcy will make or break you and your bankruptcy.  See How To Find a Good Attorney and Why Hiring a Cheap Attorney is very Expensive.

DO NOT TAKE MONEY OUT OF YOUR RETIREMENT ACCOUNT WITHOUT FIRST UNDERSTANDING THE CONSEQUENCES.

bankruptcy and COVIDIf you learn nothing else from this blog, PLEASE REMEMBER THAT YOUR RETIREMENT ACCOUNT IS PROTECTED (‘exempt‘), MEANING NO CREDITOR CAN TAKE THOSE MONIES (except, perhaps, the IRS).  To understand what that means you must talk to an experienced bankruptcy attorney.  In Arizona, most bankruptcy attorneys (like this office) offer free consultations.

The new COVID-19 hardship withdrawals allow people to take up to $100,000 from their 401ks or individual retirement accounts without penalty or mandatory withholding. The withdrawals are taxable, but the money is paid back within three years the borrowers can amend their tax returns to receive a refund of the taxes.
MUSINGS FROM DIANE:

It is perfectly normal for everyone to be concerned about their lives after COVID-19.  The gambler will make a gut decision and hope for the best.  The planner will ask questions of those who know the answers and then make plans for their future financial security.  The avoider will stick their head in the sand and pretend nothing can harm them. Who are you?  How important is your financial future to you and your family?  It is not a sign of weakness to ask for help, just make sure you are asking someone who cares about you and your future.  Stay safe.
By |Published On: May 9th, 2020|Last Updated: May 29th, 2022|

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About the Author: Diane Drain

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*

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5 / 5

“You folks are the BEST OF THE BEST in Arizona.” M.H.

You and Jay are the best attorneys I have ever had or needed and thank God for the Honorable Robert Gottsfield in recommending you folks – I would have never made it through the entire process without you and Jay and God Bless you both always and stay in touch as well. You folks are the BEST OF THE BEST in Arizona.

5 / 5

“My only regret is that I didn’t find Diane sooner.” K.H.

I can’t say enough good things about Diane. The way she handled my not typical circumstances was amazing. I was very nervous to start the bankruptcy process but Diane just has a very comforting way of explaining the whole process. My only regret is that I didn’t find Diane sooner. If you find yourself in a financial situation that you can’t correct on your own, please Call Diane Drain as soon as possible.

5 / 5

“Filing for bankruptcy can be a stressful life event” R.A.

Filing for bankruptcy can be a stressful life event, and selecting the right attorney can add to this stress. Diane and Jay were a pleasure to work with, and it is obvious that they are passionate about helping people get their life back on track. I would highly recommend them if you need a bankruptcy attorney.

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