How to Alleviate Debt Due to Unemployment During the Pandemic
Las Vegas Bankruptcy Lawyer’s Guide To Avoid Debt Issues Due To Pandemic Unemployment
Without a doubt, 2020 was one of the most memorable years of our lives. While protests of police brutality and the presidential election made headlines, most of the year’s news was dominated by the coronavirus pandemic. The coronavirus has not only had a devastating impact from a health perspective, but also from an economic perspective. Unemployment rates reached record levels, and are still elevated compared to previous years. For those who had reduced income in 2020, there may be steps that can be taken to avoid unmanageable debt due to pandemic unemployment.
Current Unemployment Rates in Nevada
While unemployment rates are still at high levels, holiday unemployment was lower than projected. The Department of Labor reported that for the week ending on December 26, 2020, there were 787,000 initial jobless claims. This was down from the previous week’s 806,000 initial jobless claims, and far lower than the 835,000 expected initial jobless claims as estimated by Bloomberg. Another 308,000 people who were ineligible for state unemployment benefits (e.g., gig workers) filed pandemic unemployment claims.
Continuing unemployment claims were measured by the week ending on December 19, 2020. There were 5.219 million continuing claims for this week, compared to 5.370 million expected continuing claims, and 5.322 million continuing claims for the previous week.
These slight decreases in unemployment claims aren’t consistent throughout the states. Some states, like Georgia, Pennsylvania, and Texas, saw more drastic decreases in claims, but these were evened out by states like California and New York, which had higher unemployment claims than the national average. Unemployment claims reaching totals that are lower than expected is a hopeful sign, but this is also the first time initial jobless claims have exceeded 800,000 since April, 2020. These rates are about 3.5 times higher than the same time in 2019.
Medical Debt From Covid 19
Because hundreds of thousands of people are losing their jobs each week in the United States, hundreds of thousands of people are also potentially losing their health insurance each week. Living without health insurance usually means avoiding doctors and medication unless your life depends on it. Medical treatment is expensive with health insurance, and astronomically expensive without it.
Politicians have previously promised that those who contract COVID-19 and receive medical treatment for it will not be charged. For those that have lost health insurance due to unemployment, being wrong about COVID-19 symptoms could mean a hefty medical bill. Those who have lost their health insurance during the pandemic should be sure to take advantage of free testing whenever possible, especially if presenting symptoms or after potential exposure to an infected person. Your community may offer free drive through testings, or your local pharmacy may also offer free testing.
If you do incur medical debt during the pandemic, you may be able to pay it off once you return to work. If not, bankruptcy may be a viable option to address your unpaid medical bills.
Chapter 7 And Medical Debt
For the most part, medical debts are unsecured, nonpriority debts. This means they are dischargeable in both of the chapters of bankruptcy most commonly used by individual consumers: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy Attorneys.
In Chapter 7 bankruptcy, most debts are discharged without any form of repayment within 4-6 months of filing. Medical debts, along with credit cards, deficiencies, certain taxes, and more will all be erased. However, the filer must meet certain eligibility criteria to be eligible to declare bankruptcy under Chapter 7. Not only do their assets need to be within their state’s eligibility limits, but their income must be below the state median based on their family size. If their income exceeds that amount, they must pass what is known as the Means Test. The Means Test calculates your disposable monthly income, and if this number falls within a certain range, you will qualify for Chapter 7 bankruptcy. If you are considering Chapter 7 but make more than your state median income, it is best to consult with a bankruptcy attorney so they can conduct the Means Test for you.
Chapter 7 comes with countless benefits, but it does have some drawbacks. If you are filing largely due to medical debt, you should be aware that your doctor may stop treating you if you discharge their medical bills in your bankruptcy. An emergency room may not legally turn you away due to your bankruptcy, but this could become a huge difficulty if you have a chronic or rare condition or live in an area with few medical provider options. You can either pay your balance, despite your legal obligation to pay it being discharged in your bankruptcy, or file Chapter 13 if you’d like to continue receiving treatment from the same doctor.
Chapter 13 Bankruptcy In Nevada And Medical Debt Bankruptcy In Las Vegas
Chapter 13 is also available to those who are struggling with debt but have too high of income to qualify for Chapter 7, or don’t want to stop seeing their regular doctors. In a Chapter 13 bankruptcy, the filer’s debts will be reorganized into a payment plan that lasts either 3 or 5 years, depending on if they make more or less than the state median income. The plan will be calculated to pay off as much debt as possible during those 3-5 years based on the filer’s disposable monthly income. This way, creditors are repaid, the payment plan isn’t too much for the filer to afford, and they will be protected from collection methods like wage garnishments and repossessions while the bankruptcy is in good standing.
Chapter 7 Bankruptcy And Credit Card Debt In Henderson, Nevada
Unemployment assistance isn’t sufficient for many Americans to supplement their income while looking for a new job. To keep bills paid and food on the table, some may rely on credit cards in the interim. Credit card debt is categorized with medical debts in bankruptcy. They can be discharged in Chapter 7, and are low priority in Chapter 13 bankruptcy.
It is important to understand that once you file bankruptcy, you can no longer use your credit cards. Additionally, credit card debt incurred after your filing date won’t be discharged in your bankruptcy. If possible, it may be better to wait until after you find a new job before filing bankruptcy if you are relying on credit cards. Some of your credit card debt may also be excluded from your bankruptcy if it doesn’t meet certain guidelines. For example, you may not have more than $1,000 in cash advances in the 70 days preceding your bankruptcy, or purchases of luxury items for more than $725 in the 90 days preceding your bankruptcy.
Contact Our Las Vegas Bankruptcy Attorneys For Help Today
If you’re one of the millions of Americans or one of the thousands of Nevadans who were laid off during the pandemic and are considering bankruptcy to alleviate your debts, our dedicated Las Vegas bankruptcy attorneys and staff are here to help. Additionally, our Vegas Debt Relief Team offer expert representation at affordable rates, and post-filing payment plans starting as low as $0 down. Find out about our $0 Down Nevada bankruptcy lawyers. Get started today with your no risk, no obligation phone consultation!
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