By Bonnie S. Lent-Davis, Esq.
I have seen clients weather the storm with resilience, and I’ve had to do it myself at a couple of critical times in my life. The “storm” can look different for each of us — an immediate loss of income, medical emergency, relational conflict, divorce or business slow down. Now we can add a 2020 global pandemic to the mix.
Have you been “benched” or moved from your cubicle to your kitchen table to help stop the spread of the Coronavirus? Can you imagine the disappointment of your marriage ending or the devastation of losing a spouse? How about the business plan of your dreams coming to a sudden end? Perhaps you have experienced one of these “storms” in your life. Each of these scenarios will have a financial impact, temporarily at best, but it may feel like a permanent brick wall built right in the middle of your road forward. Maybe you are waiting with each passing day for a financial break to come, but it isn’t coming quick enough. Many clients become apathetic, hopeless and can’t orient themselves to take effective action based on their new reality. What should your next step be?
With the news related to the Coronavirus changing by the hour in the U.S. right now it is important to review your debt obligations and monitor the websites of your creditors. If your income level has suddenly changed, it is important to be proactive and notify your creditors. Each state, along with the federal government, is either modifying or mandating changes to how debt obligations are going to be handled at least in the short term. So, without delay write out a list of your creditors and check each website for any changes to your payment terms. Notify in writing any creditors that you don’t believe you will be able to pay on time. Be sure to specify in your notice the reason—especially if it is the direct result of government actions related to the Coronavirus.
At some point, weathering the storm and pushing through may come in the form of having to consider bankruptcy relief. Generally, folks don’t want to file bankruptcy, but it will provide a fresh start or correction when it is most needed. Many Americans are now facing a new financial reality forced upon them by a global pandemic. Financial distress can be life altering and can greatly affect the relational, physical and emotional health of a person. Surprisingly, gaining control of your situation through a plan that may include bankruptcy can re-order what may feel chaotic and bring peace and clarity amid the storm.
The decision to explore bankruptcy, typically comes at the end of the road, after exhausting resources. For most clients, the investigation of the bankruptcy option should come sooner—at the beginning of the bumpy road to ensure that you make a plan that optimizes your results. You may be thinking about consolidating debt or cashing in a retirement account to increase your cash resources. Debt consolidation by way of refinancing a mortgage can put home equity at risk, withdrawing money from a retirement account triggers tax consequences and borrowing from family can cause a shift in the dynamics around the table at holiday gatherings. At any rate, you need to have a plan that includes the potential conditions that would make the filing of a bankruptcy your next move.
Uncertainty and speculation are the topics of discussion across America right now. Gatherings are banned, schools are closed, and businesses are suddenly reinventing themselves to continue to operate, if they can. Local bars and restaurants in my small community can no longer have patrons dining in the establishment and are now advertising food delivery at no cost. The wait staff and bartenders have been reassigned to meal delivery roles in less than 24 hours. We all are hoping this will be a short-term reality, but one thing is for certain: there will be far reaching financial consequences. We must weather this storm and push through with our best efforts and an eye on one another to help. We will make it through, but we must be proactive. Here at Gravis Law, PLLC, we are available to help and guide you as you weather the storm.
About the Author
Attorney Bonnie Lent-Davis practices in the areas of bankruptcy, small business advising and estate planning. Through 22 years of practice, Bonnie has partnered with clients through good times and bad, including the housing crisis of 2008. Bonnie’s focus is to preserve the “estate” through strategic planning and sound advice.
11 U.S.C. §528(a)(4) DISCLOSURE We are also a debt relief agency that helps people file for bankruptcy relief under the U.S. Bankruptcy Code.