If you recently lost your job, or face insurmountable debt due to the coronavirus, you may have considered bankruptcy. Perhaps, it will provide some comfort to know that you are not alone and that the pandemic has caused many individuals, as well as businesses throughout Ohio and the rest of the country to face financial hardships. If you are considering filing for bankruptcy, the following information contains some critical tips to help you during this time.
# 1 – Avoid the Urge to Use Your Retirement Money
While no one likes being shackled with debt, you should avoid the temptation to use your assets to pay off these debts.
In light of the coronavirus, people are allowed to take up to $100,000 from their 401(k) or individual retirement account without facing a penalty. While the withdrawals are taxable, people who can pay back the amount within three years can later amend their tax returns so they receive this amount back.
Despite this new law, however, it is still not a wise idea to pay a debt using retirement funds, that may likely be erased through bankruptcy.
# 2 – Avoid Letting the Cash Pile Up
It is important to have an emergency cash fund, but money placed in bank accounts is at risk of being seized by creditors. Fortunately, there are other options to protect your money. For example, some people elect to place funds in a Roth IRA, where any contribution can be withdrawn at any time without a tax penalty.
# 3 – Resist the Urge to Sell Possessions
Many people think it is a good idea to sell possessions to pay off a debt. In reality, the bankruptcy process can discharge some debts without being forced to give up valued assets.
Often, the best solution is to wait until after filing for bankruptcy protection. If you still think that selling off your belongings is a good idea, you may decide to do it then.
# 4 – Do Not Forget About Forbearance
Due to the coronavirus pandemic, many lenders now allow borrowers to skip one or more payments. While this does not mean you must take advantage of this offer, it can be a welcome opportunity.
Remember, many unsecured debts can also be discharged in Chapter 7 bankruptcy. While it may be less common to erase secured debt via bankruptcy, taking advantage of these forbearance options can help you save money to pay for other necessities.
# 5 – Do Not Hesitate to Retain a Bankruptcy Lawyer
Many people attempt to first resolve debt issues on their own. These people often worry that they will not have the funds to pay for a lawyer. By retaining the services of a skilled bankruptcy lawyer, you can avoid many potential complications.
Bear in mind, just because you consult with an attorney, does not mean you will automatically file for bankruptcy. After meeting with a knowledgeable bankruptcy attorney, some people discover their best option is not to file for bankruptcy protection.
Speak with an Ohio Bankruptcy Attorney
While it can be difficult to navigate, bankruptcy offers an opportunity to rebuild your credit. If you need the assistance of an experienced bankruptcy lawyer, do not hesitate to contact Dworken & Bernstein today.