In the age of the pandemic, the only certainty for businesses is that there will be uncertainty until there is certainty. That sounds like an absurd riddle but it is true. Consider what is now on the plate of the small business owner. If application was made for a Payment Protection Program loan (“PPP”) but awaits approval, will it ever be funded? In the meanwhile should employers lay people off or reduce salaries? If employees are laid off will they come back to work when things settle down? What is the likelihood of employees coming back to work if they can make more money from unemployment benefits than their regular pay? Do employees not return because of fear of exposure to the virus at work? If a PPP loan is obtained, will at least 75% of the loan be utilized for payroll and approved expenses such that the loan will be forgiven?
Author: Andrew M. Thaler
Most small business owners unavoidably have to either incur business debt in their own name (think of an American Express Card) or personally guarantee business debt. The Coronavirus has had a devastating effect on small business. Many small businesses will simply not be able to weather the storm and survive. In this scenario, an inability of non-operating companies to pay its debts will leave small business owners with personal liability on business debt. Now is the time to educate oneself on personal bankruptcy because if an individual has more business than consumer debt, they may be exempt from chapter 7 bankruptcy’s rigorous Means Test and, instead, subject only to a more flexible and forgiving budget test.
Authors: Andrew M. Thaler & Spiros Avramidis
The Coronavirus pandemic has and will continue to cause financial hardship for many individuals and businesses in the weeks and months ahead. The Coronavirus Aid, Relief and Economic Security Act known as the “CARES Act”, which was recently passed into law by Congress, provides financially distressed consumers and small businesses greater access to bankruptcy relief. Major takeaways from the CARES Act include:
Author: Andrew M. Thaler
Faced with a problem, the stress of not knowing what to do can be debilitating and result in procrastination and indecision. In the world of debt, knowledge is power. An understanding of debtor and creditor rights enables one to not only know what is likely to happen in the future but to take proactive measures to alter, to your benefit, what might otherwise happen if nothing is done. Developing a strategy to tackle worrying debt can lead to a fresh start, and financial stability. On the other hand, putting one’s head in the sand is usually a poor option because doing nothing leaves everything to chance.
The first step is to identify that there is a problem. The second step is to deal with the problem head on by getting proper and timely advice on how to solve the problem. Unfortunately many people wait too long, or never seek the advice they need in order to make good life choices. As they say, an ounce of prevention is worth a pound of cure. This is the first in a series of articles that illustrate how having pertinent knowledge can drastically affect the outcome.
Part 1 - Case Law
Author: Spiros Avramidis
In determining a potential debtor’s ability to qualify as a debtor under Chapter 7, a debtor must pass the “means” test, which is primarily a calculation of the debtor’s “current monthly income” minus allowable expenses. Therefore, correctly calculating a debtor’s “currently monthly income” is vital in passing the means test. Importantly, a debtor’s “current monthly income” will also affect the calculation of “disposable income” under a Chapter 13 because the definition of “disposable income” specifically references “current monthly income.”
An interesting question that arises when determining a debtor’s “current monthly income” is whether a voluntary withdrawal from an individual retirement account (“IRA”) within the applicable six-month period is included in “current monthly income.” The unfortunate answer is: it depends on the jurisdiction.
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