BAKERSFIELD, CA. — As the pandemic continues to affect the economy, many are turning toward filing for bankruptcy. On Monday, 24-Hour Fitness announced that they would file as a result of the COVID-19 pandemic.
Now, with no additional government aid expected and less traffic for many industries, some may be seeing bankruptcy as the ticket out.
“We anticipate that people are going to start running low on savings and things like that and that's when we’re going to see a tick in bankruptcy," said Neil Schwartz, a local bankruptcy attorney. "They assume that with bankruptcy you give up everything and your credit goes as bad as it can go. Which it does but you think you'll never recover, finance a house, or buy a car, and that's simply not true. It's geared toward people who run into these financial bumps."
According to Schwartz, industries may turn toward bankruptcy in order to re-arrange their finances. For those taking pay cuts or losing their jobs, bankruptcy can help re-analyze a new and realistic budget.
“If you've gone from a very high paying job to a lower-paying job, you have to reconfigure your budget, and a lot of times bankruptcy is part of that financial planning to negotiate the debts down or things along those lines," said Schwartz.
Schwartz says filing for bankruptcy is not something to fear and many businesses will have to do it in the upcoming months.
“I suggest people start looking into bankruptcy as soon as they start to feel a pinch or realize they’re only able to make minimum payments. Even a month or two, one pay cycle, you've already hit your credit so then the bankruptcy isn't doing harm to your credit but it is going to help you by freeing up your income down the road," said Schwartz.