Search Site

How Chapter 7 Can Provide a Fresh Start During the Pandemic

The coronavirus pandemic has had devastating financial effects on many families as a result of widespread job losses, business curtailments and company closures. If you have become burdened with overwhelming debt during these harsh times, a Chapter 7 bankruptcy may offer you the fresh start you need to move forward.

How Chapter 7 Can Provide a Fresh Start During the PandemicIf you are suffering loss of employment or have had a substantial reduction in income as a result of the recession caused by COVID-19, you may be eligible to file for Chapter 7 relief, even if you did not qualify previously due to your past income level. While the number of bankruptcy filings have declined during the pandemic, more people may be needing the protections Chapter 7 offers once their unemployment benefits and other government assistance payments run out.

A Chapter 7 bankruptcy can forgive most of your debts while allowing you to keep certain property in order to help get back on a good financial footing. If you meet the requirements for eligibility, filing for Chapter 7 bankruptcy can wipe out many types of unsecured debts such as:

  • Medical bills
  • Credit card debt
  • Past rent
  • Utility bills
  • Personal loans

Although certain types of debts — such as child support, alimony, student loans and unpaid taxes — cannot be discharged in bankruptcy, Chapter 7 can still offer effective relief.

To start a Chapter 7, you usually must pass the “means test,” which considers your average income over the six months prior to filing. Unemployment benefits and payments under the CARES Act are not counted as income. If your average monthly income is below the median income in your state for a household of the same size, you have passed the means test. If your monthly income is above that amount, you must demonstrate that your disposable income, after paying for certain essential expenses, is not enough to pay off at least a portion of your unsecured debts.

If your loss of employment or other income was recent, you may not qualify for Chapter 7, since the means test looks back at the income you made over the last several months. However, the Bankruptcy Code provides an exception if you can demonstrate special circumstances, such as suffering from a serious medical condition, elimination of your job position, a layoff and an unanticipated income reduction. A COVID-19 related loss of income would qualify under this exception.

Importantly, an automatic stay is put into place once the Chapter 7 petition is filed, prohibiting creditors from taking legal action against you, or attempting to collect any debts. In addition, mortgage lenders are not permitted to foreclose on your home while bankruptcy proceedings are ongoing.

With offices in Athens, Douglasville, Gainesville, Lawrenceville, Marietta, and Scottdale, Jeff Field & Associates guides clients through the nuances of Chapter 7 bankruptcy proceedings throughout the Atlanta metropolitan area. To schedule an appointment, call 404-381-1278 or contact us online.

More on this topic:

How the COVID-19 Pandemic Affects Your Pending Bankruptcy Proceeding

Could the COVID-19 Pandemic Lead to the End of Medical Bankruptcy?

Financial Strategies During the COVID Economic Crisis

Bankruptcy Can Provide Immediate Help for Struggling Debtors During the COVID-19 Crisis


Leave a Reply

Your email address will not be published. Required fields are marked *

Our Attorneys
Client Reviews
  • google

    Chris and Laura have been amazing! The process seamless! All of my questions and needs were addressed! I highly recommend this office for your BK needs!

    Read more

    Crystal Jackson

  • google

    This is the best Bankruptcy Lawyers ever They treat you with respect and do not judge you for the mistakes you made.Mr.Sleeper and MS.Brown are the best they answered every question I had and if I couldn't reach them they always responded to my voice...

    Read more


  • google

    Jeff Fields and Laura Everett were wonderful! It was hard but they were so helpful and with me every step of the way. They answered every question and were very accessible. I hope noone has to experience this road, but if you do, try Jeff Field & Ass...

    Read more

    Becky Sharpe

  • google

    I had my concerns about filing initially, but Jeff walked me through the process and with his calm demeanor, made this process not at all as daunting as I initially thought it would become. The process flowed effortlessly and Cassie (a BIG shout out ...

    Read more

    Charita Willis

  • google

    Due to medical expenses and serious physical problems I had to file bankruptcy. I was nervous and really depressed about the whole situation. I called Jeff Field & Associates and felt at peace after talking to a lawyer. I decided to go with them and ...

    Read more

    Sherri Ellis

See all reviews
Contact us

Please fill out the form below and one of our attorneys will contact you.

Quick Contact Form