4 Things to Know About Bankruptcy During the Coronavirus Pandemic

The current pandemic taking hold across the world is not something that has been experienced in generations. It has touched nearly every aspect of people’s lives, and the legal system is no exception. If you have recently filed or were planning on filing for bankruptcy, you must be wondering how that might be affected by the COVID-19 pandemic. To that end, we have provided some information below that will hopefully answer many of your questions.


1. New bankruptcy cases are still being filed and approved.

The courts are adapting to this new normal, which means that many proceedings are done over the phone or via video conferencing. If you are under the impression that your bankruptcy forms and documents need a wet (physical) signature, there is a good chance that requirement is being waived in lieu of a digital or electronic signature. 


2. Your 341 hearing will still be held.

In-person 341 meetings with creditors, which is required for most bankruptcy cases, have been suspended in many federal courts, including here in Michgian.   However, the U.S. trustee is still holding telephonic meetings in our jurisdiction.  Our office will provide our clients with the call in telephone number that will allow you to attend your hearing from the comfort of your home.  We will need photographs of your ID and Social Security card prior to a hearing and we may ask you to chat with us via Facetime, Google Duo, Zoom or another videoconferencing application.   Check with your applicable federal court or attorney for your options on rescheduling this meeting or conducting it by telephone. 


3. You may benefit from the recent federal stimulus package.

On March 27, 2020, a stimulus package worth over $2 trillion was signed by the president. The law provides numerous benefits to financially beleaguered business and individuals. Regarding bankruptcies in particular:

– The law further updated the definition of a “small business debtor.” Now, debtors holding secured and unsecured debt totaling $7.5 million are eligible to use the streamlined rules for Chapter 11 bankruptcy. Before, the limit was $2,725,625. 

– The means test for determining if someone is eligible for Chapter 7 bankruptcy has accommodated the severe economic downturn in its rules. 

– For Chapter 13 debtors, the federal act also allows those currently making repayment plans to apply for a modification based on a material financial hardship. The length of repayment plans may also be extended.


4. Bankruptcy filings are expected to increase.

Exact figures are not out yet, but there will almost certainly be a dramatic increase in bankruptcy filings across the country and world. Keep that in mind if you are looking to access materials for filing bankruptcy.



This blog is only intended to serve as a general guide. For specific information regarding your bankruptcy case or answers to more questions, contact the appropriate court or your attorney.