What You Need to Know About Filing Bankruptcy in 2021

What You Need to Know About Filing Bankruptcy in 2021

What You Need to Know About Filing Bankruptcy in 2021

During the COVID-19 pandemic, lawmakers have tried to protect individuals facing financial hardships. Job loss and medical bills have been a few of those financial hardships that people have faced, and they need assistance with avoiding losing everything due to these hardships.

But as the pandemic continues far longer than anyone originally expected, continuing to put off financial obligations might not be an option anymore. As financial commitments continue to pile on, you might consider how bankruptcy could help.

Here’s a look at what you need to know about bankruptcy in 2021 and some mild changes that the government has made to help protect those suffering from financial hardships due to the pandemic.

Bankruptcy law changes to protect individuals from debtors

Consumer debt can be a major reason for filing for Arizona bankruptcy. But to protect consumers, lawmakers passed the COVID Relief Bill at the end of December 2020. Here’s a look at some of the important provisions from that bill.

  • Stimulus payment protection: if you’re undergoing a bankruptcy filing, your stimulus payments are not considered an eligible part of your “property of the estate.” Therefore, if you’re going through a chapter 7 bankruptcy case, creditors cannot take your stimulus payments. This made bankruptcy more attractive to some people as it was a rare case where they would have some funds left over after filing for bankruptcy.
  • Protection for relief: you cannot be denied the opportunity to file for bankruptcy because you are taking advantage of a mortgage forbearance or eviction moratorium or similar relief. That means that if you file for bankruptcy, you might be able to continue living where you are while your other debts are discharged, offering you a new start.
  • Provision for maintenance and utility services: generally utility companies need some form of guarantee that you’ll be able to pay your bills for them to turn back on your utilities. However, the COVID Relief Bill removed that requirement. That means that after you file for bankruptcy, you might be able to get your utilities turned back on while you search for a job or another way to pay those bills.
  • These changes to the law are temporary in light of the pandemic. Once the pandemic begins to subside, you’ll likely see these provisions drop off.

    Financial resources for Arizona residents during the pandemic

    Arizona’s eviction ban and hold on utility shut-off has ended but some providers are extending further grace periods to those who cannot pay their bills. While these provisions to help Arizona residents who are down on their luck have expired, you still have some resources and options for avoiding serious financial penalties.

    Before turning to bankruptcy, you should consider how these resources and changes to the laws for 2021 might impact you. Bankruptcy is a last resort when it comes to facing financial hardships. You should explore your options first and then talk to a bankruptcy attorney.

    Starting a bankruptcy filing after facing hardships due to COVID-19

    Even though some safeguards for those undergoing financial hardships due to COVID-19 are beginning to expire, many people have not recovered financially just yet. If you’re one of those people and looking for options for getting back to a place of financial freedom, we can help.

    We’ll explain how bankruptcy can help you overcome enormous financial hardships to return to financial peace of mind and flexibility. Regardless of how you got into the financial place you’re in, we can guide you in finding a way to get relief from your financial obligations. Contact our office now for more information.