Covid-19 Pandemic & Its Impact on Businesses
Covid-19 Pandemic & Its Impact on Businesses
Companies large and small are falling prey to the impact of Covid-19.
Market experts are estimating that this year will easily set a record for the number of filing for bankruptcies.
Even a semblance of a turnaround is unlikely to change the picture.
What about individuals?
If individuals face dire financial issues, bankruptcy is an excellent chance to press the rest button.
For many senior Americans, bankruptcy does bring much-needed relief from debt brought by various factors including medical expenses and the need to help children.
A lawyer specializing in chapter 7 bankruptcy in Maryland says, “Bankruptcy is a valuable tool to protect retirement assets after conferring with lenders. People postpone bankruptcy for an unusually long time before filing. This is not a good approach. When the finances start tumbling down, they should file right away”.
People must undergo a means test to find out which type of bankruptcy suits them best.
In all probability, Chapter 7 will work best for people with modest income or assets.
The corona virus has impacted tens of thousands of people, but you can still figure out how to safeguard your future.
Filing for bankruptcy can wipe out many bills and also keep your retirement accounts intact.
If you are struggling with debt and want to erase certain obligations, then bankruptcy is the best way to make a fresh start.
The two most common bankruptcy types filed are Chapter 7 and Chapter 13.
Chapter 7 is the most commonly opted because it wipes out most of your unsecured debts such as medical bills and credit cards with no need to pay back the dues.
On the other hand, people who are better off choose Chapter 13.
It is a reorganizing plan that allows you to pay back a portion of your debts through a repayment plan.
A chief advantage of Chapter 13 is that you do not have to give up any property, including nonexempt property. You can pay your debts out of your income as per the reorganizing plan.
There is another type called Chapter 11 which is specifically designed to enable businesses that are under pressure to restructure their finances and maximize their returns to their creditors.
Many of you could be under the impression that individuals cannot file under Chapter 11, because the perception is this chapter is meant only for big businesses.
This is not correct.
Chapter 11 allows people who do not qualify for Chapter 13 but need some kind of special safeguards that Chapter 11 provides.
Instances of personal bankruptcy chapter 11 in MD though not common do exist.
Some businesses leveraged the pandemic as an opportunity to open a new chapter.
But for most businesses the negative economic impact of Covid-19 was swift. These include retailers, oil producers, airlines, restaurants, and more.
Yet we must keep in mind that many of these companies were in dire financial trouble even before the state governors instructed non-essential businesses to shut down to help contain the spread of coronavirus.
It remains to be seen how things will straighten out when this pandemic is finally over.