Personal bankruptcies are expected to rise when pandemic programs expire

VIRGINIA BEACH, Va. (WAVY) – Bankruptcy attorneys expect their business to grow in the coming months for two reasons: deferred payment plans are dated from lenders, and stimulus checks are no longer coming as they were earlier this year.

“I’ve noticed a change in the past three to four weeks. We’re definitely seeing an upswing, ”said Christopher Flynn, Attorney at Boleman Law Firm, which has offices in Virginia Beach, Hampton and Richmond.

The pandemic is still with us, but in the early days lenders were more inclined to give their creditors a break. That is changing, and people haven’t seen a stimulus check in three months.

“I’m starting to hear (from customers) ‘that the car payment we put on hold is due,'” Flynn said.

Some people who became unemployed started living on their credit cards. They hoped that they would get work again and pay off the balance.

“But at the end of the day, they have a hard time digging out the hole because suddenly there is an interest rate of 20.25%,” he said.

Filing for bankruptcy is one option. and there are two types. Chapter 7 will pay off your unsecured debts such as credit card balances, medical bills, and personal loans. You would still be responsible for a car loan, mortgage, and tax bill.

According to Chapter 13, you will realign your debts and agree to pay your creditors with a single payment each month.

But neither option is going to help you with a growing source of debt nationwide – the money people borrowed to go to college.

“People who are really hit by student loan debt are not deductible in almost all bankruptcies,” said Flynn.

A Chapter 7 filing will stay on your credit report for 10 years, while Chapter 13 will last for seven years.

All bankruptcy cases are dealt with in federal courts. The cost of filing Chapter 7 varies depending on the situation, but Flynn cited a range of $ 900 to $ 1,500, with assistance programs for those who can’t pay. Chapter 7 legal fees must be prepaid.

The cost of filing a Chapter 13 bankruptcy filing is currently set at $ 5,434. It can be paid in advance or over time by including it in the monthly consolidated payment that is calculated towards paying creditors through a trustee.

Flynn says that in virtually all cases, the debtor does not have to appear before a judge, as the cases are handled by lawyers.

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