COVID-19 Is Causing An Increase In Bankruptcies. Here Is What You Need to Know.

Written by letsimmix

Published on June 15, 2020

The novel Coronavirus or “Covid-19” has impacted individuals and families across America. Here at The Law Offices of Warner Mendenhall, we have noticed an uptick in bankruptcy cases. The following is a summary of the bankruptcy process. Bankruptcy relieves people and business from the burden of debt. Most people go through bankruptcy under Chapter 7 or Chapter 13 of The United States Bankruptcy Code. 

Chapter 7 Overview

Chapter 7 bankruptcy is liquidation. This process starts by filing a petition listing your assets and debts. The trustee will review your property and assets and determine if any are not exempt under R.C. 2329.66. Common examples of exemptions include homestead exemption (which allows you to keep your house), household goods and furniture, and a cash exemption up to $400.00. The exemptions are not part of the bankruptcy and creditors will not be able to take them.

After your petition is filed, the trustee will conduct a hearing at which you must testify and the trustee will ask about your assets and the exemptions. Some debts cannot be discharged such as student loans, alimony/child support, and recent income tax debts. Income tax debts from filings 3 years before the bankruptcy and older can be discharged. 

Chapter 13 Overview 

In a Chapter 13 bankruptcy process you propose a plan to repay creditors a percentage of  outstanding debts over 3-5 years. At the end of your payment period, any remaining debts will be eliminated if you follow the agreed-upon payment plan. This process is popular amongst debtors who are looking to keep valuable property, avoid foreclosures, and protect assets in which they have equity. 

Chapter 13 bankruptcies require the debtor to have a regular source of income and some disposable income as well to make these plan payments. In addition to income, debtors must pass the means test. Ultimately, chapter 13 bankruptcies should be looked at as a reorganization of debts as compared to chapter 7 bankruptcies, which can be looked at as wiping out the debts. 


For many people, the circumstances surrounding bankruptcy can cause stress. It is essential to seek legal counsel for questions regarding bankruptcies. We provide free initial consultation for bankruptcy cases and flat fees if you decide you want to file. For more information, please contact The Law Offices of Warner Mendenhall.

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