How the Federal Bankruptcy Courts are Responding to COVID-19
The COVID-19 pandemic has crashed the economy harder than even the bursting of the housing bubble did a decade ago. Over 17 million people in the United States have filed for unemployment in the past few weeks, which means they are probably feeling substantial financial distress. And small businesses have been hammered by stay-at-home orders issued coast to coast, along with directives to shut nonessential businesses.
Because of this economic shock, some economists predict that the economy will contract by around 35% in the second quarter of 2020. Along with the contraction should come a surge in bankruptcy cases. According to a recent article, our nation’s bankruptcy courts are preparing for just that.
More Virtual Hearings
To encourage social distancing, judges have switched to holding hearings by video instead of meeting in the courtroom. They are also pushing off certain 341 Meeting of Creditors, where the trustee and creditors meet with the debtor and ask questions. In total, almost 60,000 of these meetings were rescheduled for over the phone.
These delays can certainly slow down cases, which is not ideal for many of our individual Chapter 7 clients, who want to exit bankruptcy as quickly as possible. However, video conferencing has allowed the courts to remain open at least, and our cases are certainly moving forward here in the Southern District of Florida.
No Surge in New Bankruptcy Filings—Yet
The courts are also preparing for a flood of cases to hit. For example, they have beefed up on hiring attorneys to help small businesses that file for Chapter 11 reorganization. These attorneys will act as mediators in small business cases.
Statistics, however, show that no surge has yet arrived. Although more large businesses filed for bankruptcy in March 2020 than in a year before, the number of small businesses and consumers filing for bankruptcy actually declined for the month. However, that small decline could be reversed later in the spring unless we collectively open the economy and it recovers dramatically.
How to Help Your Case Move Ahead during this Time
If you have a current bankruptcy case, you should contact your lawyer to discuss the status. Your lawyer will help you understand if there are any snags or if the court is not operating.
There are also things you can do to help your case during these trying times:
- Get all requested information to your attorney as soon as possible. Also make sure that the information you provide is accurate and complete the first time.
- If you are on a current Chapter 13, continue to make monthly payments on your plan. If you are facing financial distress, quickly contact your Plantation bankruptcy attorney to discuss how to revise the plan so you can stick to it.
Those who have not yet filed for bankruptcy should discuss whether this is a good option. For people with few assets, a Chapter 7 remains the fastest way to eliminate many debts, like medical debt and credit card debt.
Contact our law firm today. We serve the South Florida community with offices in Miami, Jupiter, and Boca Raton.