MIAMI (CBSMiami) – The coronavirus pandemic has forced some major corporations to declare bankruptcy, yet many continue to operate.
Smaller businesses and people deep in debt have taken notice.
“They see huge companies that went bankrupt like Hertz, Neiman Marcus are still operating. They want to know how can I do that,” said attorney Patrick Cordero whose firm is known for bankruptcy work.
The economic forecast is bleak in the short term. People are out of work and there are more layoffs to come. Federal and state assistance is lacking and for some declaring bankruptcy may be one of their few options.
“Most people who have called me are normal people, individuals who are concerned with what will happen tomorrow. They know they are behind on their mortgage, behind on credit card debt, two months behind on the car payment and they want to know what the can or cannot do,” said Cordero.
Various bankruptcy laws can provide for the reduction, or elimination of certain debts, and can provide a timeline for the repayments of debts over time.
“The good thing about bankruptcy is people can choose. You can modify, negotiate, or eliminate. You can get a plan to keep your home, payoff or lower car payments, eliminate credit card debt, and keep your business,” said Cordero.
Filing under Chapter 7 allows for a person’s assets to be liquidated and proceeds sent to creditors. Chapter 11 allows a business to continue to operate while debt is negotiated and Chapter 13 allows debtors to obtain a court-approved plan to pay off debts.
For those interested, be aware you’ll have to pay for an attorney which can cost $500 to $1,500 or more if it is a complicated case.
One caveat – a bankruptcy does not disappear from your credit score for seven years or more. However, banks and other lenders might take into consideration that the pandemic of 2020 created a unique set of economic circumstances.