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 In Bankruptcy, Bankruptcy and Life, Blog

Throughout the COVID-19 pandemic, many people are losing their jobs throughout San Antonio and the rest of the country. Whether you worked at a restaurant along the Riverwalk, throughout Historic Market Square, or anywhere else, you may find that your hours have been cut drastically or you have been laid out. As money gets tighter, you may think that the only option is bankruptcy.

There are some tips that you can take in order to avoid bankruptcy now and throughout the pandemic.

Establish a Budget

One of the first things that you need to do is establish a budget. Identify what kind of income you have coming in. Be sure to include all sources, such as unemployment, child support, paychecks, and anything else. If your income is low, consider ways that you can infuse money into your bank account at the moment. This can include delivery jobs, online freelancing, and even selling unwanted items online.

Then, look at all your expenses. Do what you can to cut expenses that you don’t need right now. You may already be saving in gas because of shelter in place restrictions. However, are there any other areas you can cut? You shouldn’t be eating out or doing any online shopping during this time.

Some of the most common areas to cut include:

  • Online subscriptions
  • Visits to the coffee shop
  • Dining out/delivery
  • Cable

You can also get creative in other ways to cut your expenses. Consider reducing your phone plan. Cut groceries by changing some of the foods that you buy for you and your family.

If your expenses outweigh your income, it’s only a matter of time before you have to decide what bills are going to get paid and what bills are going to end up in collections. The goal of writing a budget is to ensure that you have more income than expenses. If your expenses are higher, there may be some other options available to you.

Explore Unemployment

If you have lost your job as a result of the pandemic, you will want to file for unemployment insurance as soon as possible. The U.S. government has even gone as far as extending the coverage of unemployment and adding to the amount that you would normally get. It can be the added income that you need to take care of the various financial obligations that you have.

While it might take a week or two to start seeing the unemployment funds come in, this can be a way to get the money that you need coming in again until the pandemic is all over. If you have income on the way, it can also make it easier to have conversations with your creditors.

Understand Options from CARES Act

Congress has passed a $2 trillion bill known as the CARES Act. It’s designed to help individuals and small businesses with the financial impact of the pandemic. There are various things included that can help you based on your personal situation.

If you are a freelancer, you have the ability to file for unemployment or apply for a grant. If you are a small business, you can get a grant and explore various ways to defer tax obligations.

Additionally, there will also be a stimulus check sent out to Americans within the coming weeks. This will be $1200 per individual or $2400 per couple who file jointly on their taxes. If you make less than $75k as an individual or less than $150k as a couple, you will be able to receive the full amount of the check.

Rather than using the stimulus check as a way to buy yourself a big screen TV or put it into savings for your next vacation, it’s best to apply it directly to your weekly expenses.

Contact Your Creditors

You will also want to talk with all of your creditors regarding how they’re going to handle late payments. Right now, there are millions of Americans being impacted by the pandemic. As such, companies are not focused on repossessions or evictions at the moment. However, you need to talk to the companies to let them know of your inability to pay.

Insurance companies, cell phone providers, rental companies, credit card companies, and more are offering flexibility with the payments. Some companies are choosing to waive a month entirely while others are allowing you to defer a payment until the pandemic is over.

Some creditors will work with you in terms of establishing payments that you can afford. Let them know what you are able to pay. They may be able to restructure your loan so that you’re paying less each month but for a longer period of time. Other creditors may even negotiate what you owe entirely, saving you a considerable amount of money.

Talk with an Attorney

It’s important to know about your options before you blindly decide to file for bankruptcy. The pandemic is a scary time, and you don’t want to make any hasty decisions that can impact your credit score for the next seven years.

Debt consolidation loans and debt settlement services may not provide you with the financial relief that you think that they will. Instead, talk with a bankruptcy lawyer, first. It will make it easier to know what your options are based on what your financial situation is.

You’re not alone in your financial struggles. With millions of people filing for unemployment every day across America, it’s clear that COVID-19 has had a significant impact on the economy. Filing for bankruptcy is an option, but it’s not the only option that you have. With the U.S. government offering various forms of financial assistance, you will want to explore how those resources can be used to improve your financial wellbeing before trying to file for bankruptcy.

If you feel as though bankruptcy is inevitable or you want to discuss options with a bankruptcy lawyer, contact us at Malaise Law Firm. We offer contact-less consultations to guide you through this difficult time.