How COVID-19 May Impact Your Personal Bankruptcy

How COVID-19 May Impact Your Personal Bankruptcy

The COVID-19 outbreak has had and will continue to have a significant financial impact on many individuals and families throughout Georgia. For many individuals, the coronavirus means unemployment or a significant decrease in income. The financial crisis may result in a new bankruptcy case or problems with an existing Chapter 13 bankruptcy case. If you cannot pay your debts because of COVID-19, contact our Georgia bankruptcy attorney now to discuss your bankruptcy options for debt relief.

How Can COVID-19 Impact A Chapter 13 Case?

If you are currently in a Chapter 13 repayment plan, the coronavirus pandemic could result in temporary unemployment. Unemployment benefits have been enhanced to assist individuals during this crisis. Even though you are unemployed because of COVID-19, you are expected to continue paying your Chapter 13 payments with your unemployment benefits.

However, if you find that you cannot afford your Chapter 13 payments, contact your bankruptcy attorney to discuss your options. The court may grant you a two to three-month deferment of bankruptcy payments to help you recover from a financial hardship caused by the coronavirus. 

For individuals in a confirmed Chapter 13 case, Congress has passed emergency bankruptcy laws that would allow you to lengthen your Chapter 13. Clients that opt to lengthen their case often can lower their Chapter 13 payment considerably.

If you continue to struggle with the Chapter 13 payments, you might be eligible to convert your Chapter 13 to a Chapter 7 case after a few months of being unemployed. The Chapter 7 case eliminates most unsecured debts without any further payments to the Chapter 13 trustee.


To receive a bankruptcy discharge under Chapter 7, you must meet certain income requirements. Chapter 7 is for individuals and couples who do not have sufficient disposable income to repay their debts. Disposable income is the amount of money you have each month after deducting allowable living expenses from your average monthly income.

The Chapter 7 Means Test calculates your average income. Your income is compared to the average income of households in Georgia. If your income is below the median income for Georgia, you may qualify for a bankruptcy discharge (debt forgiveness) in Chapter 7. 

The median income levels are adjusted periodically to reflect current median income levels. Therefore, the median income levels could decrease in the upcoming months from the current figures used for cases filed on or after April 1, 2020.

Because many people are unemployed or have significantly reduced income because of COVID-19, they may qualify for Chapter 7 even though they may have not qualified for Chapter 7 before the outbreak. Average income is based on your income for the six months before filing Chapter 7. If you are unemployed or have a reduction in income, your average income may drop below the median income level within a few months after a decrease in income.

Most Chapter 7 cases filed in Georgia are no-asset cases. No-asset Chapter 7 cases typically take about three to four months to complete. Individuals in a no-asset Chapter 7 case keep all of their property while getting rid of all or most of their unsecured debts.


Sadly, many people will incur substantial financial losses because of the COVID-19 pandemic. Many families in Georgia will face a financial crisis that may last many months or years after the outbreak subsides. 

If you experience financial problems related to the coronavirus, contact our Georgia bankruptcy attorney for a free consultation. You may have one or more bankruptcy options that can help provide debt relief so that you can recover from financial hardship.