As Louisiana continues to struggle with the pandemic, health concerns are being considered alongside the economic challenges posed by the crisis. State and federally mandated shutdowns have forced businesses to close, and it’s been estimated that more than 30 million Americans have lost their jobs.
While Congress has passed stimulus packages to boost the economy and extended unemployment benefits for workers, the shutdowns are expected to have a painful effect on the economy. For states like Texas and Louisiana that rely heavily on jobs in the oil and gas industry, the Stay At Home orders have significantly weakened demand for gasoline.
Business owners and laid-off workers in Louisiana have no easy answers for when an economic recovery will arrive, and many may turn to bankruptcy protection to relieve mounting debt.
Does COVID-19 Affect Bankruptcy?
The Stay At Home orders issued in Louisiana and other states have had an impact on the courts as well. While bankruptcy courts are still open, court hearings have been done over the phone and not in person.
In many states, pending 341 meetings of creditors have been postponed to a later date. Everyone who files for Chapter 7 bankruptcy, whether as a business or individual, is required to attend a 341 meeting of creditors where the person responsible for overseeing your case will verify your identity and ask questions about your bankruptcy filing. Due to COVID-19 social distancing measures, courts are not holding in-person 341 creditor meetings.
For those who filed Chapter 13 bankruptcy, which allows people to repay their debts over time while being able to keep valuable assets like their home, debtors are still obligated to make plan payments to the Trustee. If you’ve been financially impacted by COVID-19 and can no longer make those payments, each trustee has different rules on how they assist debtors who have been financially impacted by COVID-19. You’ll need to provide documentation of any income loss due to COVID-19. In addition, the bankruptcy court still expects you to make your mortgage payments.
Will COVID-19 Cause a Major Spike in Bankruptcy Filings?
No one knows how this situation will play out in the summer and fall. But we’ve already seen that bankruptcy has joined the national dialogue about the economic impact of COVID-19.
Louisiana’s U.S. Sen. Bill Cassidy is introducing a bill to provide direct federal funding to his home state and other states and local governments to save them from possible bankruptcy. Cassidy’s bill would provide funding that governments could use to replace tax revenue lost during the pandemic as businesses shut down. While Louisiana received $1.8 billion from the federal stimulus to offset expenses brought on by the COVID-19 shutdowns, that money can’t be used to offset lost tax revenue. As Cassidy noted:
“How can we expect state and local governments to pay for police and fire protection and sanitation services when their tax base has collapsed … Businesses can’t come back at full strength if state and local governments can provide essential services.”
Cassidy’s bill would create a $500 billion fund. The senator noted that Louisiana’s tax base “has been destroyed” during the shutdown, as industries like tourism, oil, and gas have taken major hits. Louisiana’s oil and gas industry has been damaged by decreased demand, and the industry has been urging leaders to suspend severance taxes to help offset the financial crisis they’re experiencing.
Get Guidance on Bankruptcy from Louisiana Bankruptcy Lawyers
If you’ve lost your job or your business has been closed due to COVID-19, we understand how scary it must be right now. If you’re struggling with debt and contemplating different options for filing personal or business bankruptcy, the attorneys at E. Orum Young Law Offices remain open as an essential business.
With more than 35 years of experience, they understand the complexities of filing for bankruptcy and can help ensure you’re on the best course to financial freedom. Call 318-450-3192 for a free case review or contact them online today.