The Corona Virus has changed the way we all do business and socially interact with one another. In some ways, it has resulted in people placing their lives on hold and waiting until the end of Corona Virus to resume regular, normal life. An example of this “freeze” on regular life has been in bankruptcy filings. Bankruptcy filings nationally were down to about 50% of normal during the height of the Corona Virus. Although some bankruptcies are emergency cases that must be filed immediately to stop a foreclosure or wage garnishment, the vast majority of bankruptcies are not. Nearly all bankruptcy cases are almost always filed later than they should have been filed. As the restrictions to the Corona Virus are beginning to be lifted, many people may be wondering whether or not it is the right time to file bankruptcy or whether they should wait longer to file bankruptcy.
If bankruptcy is the best option to rebuild your financial life, it is always better to file sooner rather than later. The sooner you file, the sooner you can stop creditor harassment, and the sooner you can rebuild your credit. In the vast majority of bankruptcy filings, bankruptcy allows the filer to rebuild credit in the fastest and most cost effective manner possible. As a result, filing for bankruptcy sooner nearly always allows for a quicker recovery and the fastest way to have better credit.
Bankruptcy courts have been open and taking new filings throughout the Corona Virus outbreak. The greatest benefit of filing for bankruptcy during the Corona Virus outbreak relates to the Meeting of Creditors (also known as the Section 341(a) Meeting). Each and every bankruptcy filer is required to attend a Meeting of Creditors. In Los Angeles County, that usually means going to Downtown Los Angeles or Woodland Hills. In Ventura County, that means going to Santa Barbara. In Orange County you would go to Santa Ana, and in San Bernardino County it means going to Riverside. So typically, a bankruptcy case would involve some travel and for many filers it would involve very significant travel.
However, as a result of the Corona Virus, the in-person requirement to attend the Meeting of Creditors is on hold. All Meeting of Creditors are currently being held online or via phone. This change has made the process of bankruptcy dramatically easier. In addition to eliminating the need to travel, it has taken much of the fear and anxiety of attending the Meeting of Creditors away. It is much easier to attend a hearing at home via phone or online than going to an unfamiliar place, surrounded by strangers, and being intimidated by the surroundings.
The in-person requirement to attend the Meeting of Creditors has always been in place. In normal times, the only way to be excused from attending in-person is to get a note from a doctor that clearly explains why the bankruptcy filer cannot attend in-person due to their medical condition.
The Corona Virus has presented a unique opportunity to file for bankruptcy and attend the Meeting of Creditors remotely. However, keep in mind that the Bankruptcy Court can change the rule at any time and revert back to in-person meetings, so time is of the essence. So if you have been considering bankruptcy, filing bankruptcy now, during the Corona Virus, is the best decision you can make. The Corona Virus rule change has essentially removed the most difficult aspect of the bankruptcy process.