How COVID-19 Coronavirus is Affecting Bankruptcy

April 10, 2020by Melanie Sacks

COVID-19 Pushing the Bankruptcy Envelope


If you live in Northerneastern Florida, chances are you have been affected by the Coronavirus (COVID-19). Chances are so have your finances. Even with SBA loans, and stimulus packages aimed at helping people get through the quarantine, people are being pushed more and more financially. When the strain is just to much to bear and your past the point of credit counseling, it may be time to consider a bankruptcy attorney.

The coronavirus (COVID-19) pandemic has changed the USA and the world, and things may never return to normal. Everything is different, and even the US Bankruptcy Code has been revised. These revisions occurred when President Donald J. Trump signed the historic Coronavirus Aid, Relief, and Economic Security Act into law. The CARES Act, as this law is known, was passed to provide an economic stimulus package worth two trillion dollars, and relief payments to millions of Americans in desperate need of economic assistance.

Record numbers of unemployment claims across the USA, soaring personal bankruptcy and business bankruptcy cases, and severe financial hardship is becoming common as the coronavirus (COVID-19) pandemic results in entire states placed under stay at home orders and businesses large and small forced to shut down. The CARES Act made changes to the bankruptcy code to provide individuals and small businesses with needed relief more effectively during these unusual times.

Jacksonville Florida Bankruptcy Numbers Were High Even Before the Coronavirus (COVID-19).

Both personal bankruptcy and business bankruptcy rates in Jacksonville, Florida, and the surrounding area have been high for years. In 2011 the Middle District Bankruptcy Court which covers Jacksonville, Tampa, Fort Myers, and Orlando had the second-highest number of cases filed in the entire country, averaging approximately 1 case for every 100 people. Recently there has even been talk of Jacksonville, Florida filing for chapter 9 bankruptcy protection, although this is highly unlikely.

The current coronavirus (COVID-19) pandemic is sure to increase the number of filings significantly as the loss of jobs, high unemployment rates, and financial hardships get worse. Mortgage payments are being missed, debts are piling up, there are delays in unemployment benefits because of the enormous number of claims filed each week, and millions of Americans were not eligible for the relief payments offered under the CARES Act package.

Will Bankruptcy Help My Finances or Business?

Filing for personal bankruptcy or business bankruptcy protection is a decision that should not be taken lightly. Still, the financial hardship and economic problems caused by the coronavirus (COVID-19) pandemic have forced many individuals and business owners into a corner with nowhere else to turn.

The loss of a job, with layoffs and business closings common across the USA, means that many Americans are falling behind on their monthly obligations like mortgages and car loans, as well as other necessary expenses. Debts are going unpaid, and debt collectors are even trying to take the stimulus relief payments that many are receiving in order to prevent financial hardship in the first place.

The funding set up in the CARES Act intended to help small businesses cover payroll and operating expenses were depleted in less than a week, with many companies turned away because there were no funds left. Funding is expected to be replenished, but in the meantime, you are still facing staffing costs and other business expenses with little or no revenue to work with.

Right now, personal bankruptcy or business bankruptcy filing may offer some breathing room, and much-needed debt relief and financial protection.

Can I Still File for Personal Bankruptcy or Business Bankruptcy During the COVID-19 Pandemic?

Most bankruptcy courts are still accepting filings for petitions and motions. Hearings are typically being held by phone instead of in-person, though.

Will the Bankruptcy Trustee Take my Stimulus Relief Payment?

If you filed for personal bankruptcy, the bankruptcy trustee would not take any of the relief payment that you received as part of the CARES Act.

What Does the Small Business Reorganization Act of 2019 Amendment Mean for Business Bankruptcies?

The Small Business Reorganization Act of 2019 was amended as part of the CARES Act so that the debt threshold was increased under Chapter 11 sub chapter V of the bankruptcy code. In the past, small businesses who were struggling did not usually use chapter 11, opting for chapter 13 instead because it was more cost-effective and required less time. In addition, chapter 13 allowed you to retain more control during the business bankruptcy process, but that has changed with the new amendment.

Should I Use Chapter 7 or Chapter 13 for My Personal Bankruptcy?

If you are experiencing financial hardship because of the coronavirus (COVID-19) pandemic, then you are not alone. If you are considering personal bankruptcy because of the loss of a job, the prospect of losing your home because of missed mortgage payments, mounting debt, or other issues related to the pandemic, then the next question is chapter 7 or chapter 13. Both of these were also amended as part of the CARES Act.

Both bankruptcy types may be the right solution to your financial problems and debts in some situations, and the wrong option in others. Every case is different, and your income, debts, and assets will help determine whether chapter 7 or chapter 13 can provide better protection and debt relief in your case.

Why Sacks and Sacks Law Firm?

If you or your business is experiencing financial hardship and mounting debt because of the coronavirus (COVID-19) pandemic, then bankruptcy may be the right solution. At Sacks and Sacks Law Office, we have over 22 years of experience, and we are available 24/7 to help with all of your debt relief and bankruptcy questions and needs.



Leonhardt, Megan. “ What to know if coronavirus has you considering filing for bankruptcy.” April 16, 2020, Accessed 28 April 2020.

Burgess, Todd A., and Green, Trinitee G., “Covid 19 Changes Everything Including US Bankruptcy Code” National Law Review March 31, 2020, Accessed 28 April 2020.  

Turner, Kevin, “First Coast No. 2 in country for filing bankruptcy.” The Florida Times-Union January 12,2011, Accessed 28 April 2020.

Basch, Mark. “City Chapter 9 Bankruptcy ‘Easier Said than Done.’” Jacksonville Daily Record – Jacksonville, Florida, Jacksonville Daily Record – Jacksonville, Florida, 18 July 2012, Accessed 28 Apr. 2020.  

by Melanie Sacks

Melanie Sacks is a Bankruptcy Attorney at Law Offices of Sacks & Sacks, P.A. in Jacksonville, Florida. She has been practicing Bankruptcy Law since 1998 and is a graduate of the Thomas M. Cooley Law School, Lansing, Michigan.

Sacks and Sacks Law
1646 Emerson St. Suite B Jacksonville, FL 32207

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