According to American Bankruptcy Institute Executive Director Amy Quackenboss, “Companies that tried to shore up their balance sheets at the beginning of the year represent the initial wave of chapter 11s due to the economic crisis brought about by the COVID-19 pandemic… The CARES Act and other swift government measures have been successful in keeping consumers afloat during the crisis. As this relief runs its course, however, mounting financial challenges may result in more households and companies seeking the shelter of bankruptcy.”
We are bracing for dramatically increased filings in the fall/winter when many of the protections afforded consumers are expected to have ended or modified, including:
- Executive Orders which have prevented or delayed evictions and foreclosures,
- Federal unemployment benefits which will cease at the end of July unless extended,
- PPP loans,
- Mortgage forbearances which once ended will in many instances require homeowners to pay a lump sum representing 4 months of mortgage payments at one time, unless negotiated, modified or stayed by a bankruptcy filing.
For those in financial distress or uncertain what the future might look like down the road, now is the time to have the situation carefully assessed by a professional who can prepare a forward looking plan that might include, among other things, mortgage modification, asset protection/exemptions, workout and/or potential bankruptcy options.