Covid-19 has resulted in massive job losses and reduced incomes in Massachusetts. While there is some hope of massive vaccinations on the horizon, it is entirely possible that many of the jobs lost due to the pandemic may not completely return when it is over.
In the early days of the pandemic, there were several efforts taken by the state government to protect consumers. They included a prohibition of debt collectors from making collection calls and filing new lawsuits. This was unfortunately determined to be unconstitutional by a federal judge in Boston, though, so it is no longer in effect.
The state also issued an eviction and foreclosure ban that ended in October 2020. However, there are still some limited federal prohibitions on eviction and foreclosure in place.
For the most part, debt collectors are now free to resume normal debt collection efforts even though the pandemic is ongoing. Collection calls and letters have returned. Many debt collectors are beginning to file new collection lawsuits, including wage garnishment actions. And car repossessions and foreclosures are taking place throughout Massachusetts.
The state and federal courts are open for business, even if most of that business is being conducted remotely through phone calls and videoconferencing.
The bankruptcy courts are open, too.
Currently, the Massachusetts Bankruptcy Courts are also working remotely. Trustee meetings and court hearings are typically being conducted over the telephone. And the Court has issued new guidance allowing debtors and attorneys to meet and sign document remotely. Currently, our office is conducting nearly all meetings by videoconference or phone.
As a result, bankruptcy is an open and available option to deal with unaffordable debt, even during the Covid-19 pandemic. In fact, if you are currently dealing with debt collections due to a Covid-related loss of income, it could be an advantageous time to consider bankruptcy.
A Chapter 7 filing offers you the ability to obtain a discharge of debts without any payment plan. It is a quick process that typically takes about 100 days from start to finish. It is considered a “liquidation of assets,” but thanks to state and federal laws, most cases are “no asset” cases in which no property is lost.
In order to qualify for Chapter 7, though, you need to pass a “means test” that compares your household income over the last six months with the median income for your household size in Massachusetts. The Court only counts the income you received in the last six months.
The current median income for a household of 4 in Massachusetts is over $140,000. More household size/income data is available here. If your household income over the past six months is below median, then you automatically qualify for a Chapter 7. This is true even if you are below median due to a job loss caused by Covid-19.
Collection efforts are ongoing throughout Massachusetts. If your income has been reduced due to Covid-19 to the point where you are now eligible for a Chapter 7, then it may be wise to consider this option now, as it might not be available to you in the future.
While a bankruptcy filing does of course impact your credit, we believe that any decision to file is a business decision made for the long-term economic well-being of you and your family. There are a number of factors that should be considered in making this decision.
If you’re struggling to keep up with creditors – even during the Covid 19 pandemic – then contact us today to discuss your options.