5 Steps for Avoiding Bankruptcy Due to COVID-19 Financial Constraints

Now that we have been living with a global pandemic – and stay-at-home mandates – for several months, certain sectors are seeing business boom. That includes grocery and food delivery companies, makers of masks and other PPDs, and bankruptcy attorneys.

That last category owes its success to the fact that so many other businesses and people are experiencing financial difficulties related to the novel coronavirus. Across the country, companies found themselves closing up shop, many of them temporarily. At the same time, individuals were laid off and/or lost much of their income. Despite the CARES Act, which provided loans and grants to small businesses as well as stimulus checks and extended unemployment benefits to individual Americans, many of us continue to struggle economically.

Considering filing for bankruptcy as a result? Before you call that attorney, check out these steps for keeping your company or your household afloat.

1. Undertake an Honest Accounting

It can be tempting to stick your head in the proverbial sand and hope this whole situation goes away. But you’ll be less stressed if you have a solid grasp on your exact financial standing.

First, determine what your net income is these days. That includes any income, Pandemic Unemployment Assistance, and any other regular money you can count on. Then add up your monthly expenses: housing, food, utilities, car payments, insurance, and other services or items you cannot live without. Subtract that total from your net income.

Third, determine the minimum due for each of your debts, such as credit cards and student loan payments. Does your income cover that amount? If you can make those monthly minimum payments, you should be OK for the time being. You might be a little strapped for cash, but if you can avoid bankruptcy, it’s worth it.

2. Do What You Can to Cut Back

While you were adding up all those expenses, you may have discovered a fair amount of bloat in your budget. It’s a good idea to cancel subscriptions for streaming entertainment services, food delivery, and other luxuries. You can always sign back up or treat yourself later on when things aren’t so tight.

Most folks can find ways to slash their grocery budget, too. If you’re truly struggling, look into area food banks, as well. This isn’t the time to let your pride stand in the way.

Anyone who is still driving to an essential-service job has probably already noticed the plunge in gas prices, which is a definite money saver. Those who are staying put are saving on gas, tolls, and vehicle wear-and-tear.

3. Ways to Raise Some Extra Income

Another important question to ask yourself before you find the best bankruptcy attorney for your needs is whether you can make a quick buck based on your skills or belongings.

Antiques, collectibles, and even high-end clothing or kitchen appliances can fetch a pretty penny. Especially if you are unemployed and getting antsy, this is a great opportunity to go through your closets and attic to clean out and downsize.

Or, if you have been dreaming for a while of starting your own small business or side hustle, why not seize the moment? Make sure your product or service is something that people will still pay for, even if they’re pinching pennies, too. Who knows – maybe the gourmet cupcake craze will make a comeback.

4. Look into Resources for Veterans

As a veteran of the United States military, you are entitled to a little extra help. The AARP has assembled a master list of all the resources available during these unprecedented times. Don’t be shy about calling around to see which programs or services you might qualify for.

5. Remember that Bankruptcy Isn’t the End of the World

While filing bankruptcy is typically considered a last financial resort, it doesn’t have to mean the end of the world. Yes, there are consequences, and it might take some hard work and sacrifices to come back from being bankrupt. But if there’s one thing that veterans excel at, it’s overcoming hard work and sacrifices in order to survive and thrive once again!