Are bankruptcies going to increase post COVID-19 pandemic?

Predicting the economic future is always a tough task and in the aftermath of a pandemic, it’s almost impossibility. One thing’s for sure, the world will be hurtling towards a prolonged recession and bankruptcies are surely going to increase in the absence of adequate Govt. stimulus and tax cuts. The only question is what be the shape of the upward spiral? Will it be a steep rise or will the increase be in a phased manner?

The filings for bankruptcies under Long Island bankruptcy law won’t be evident in the immediate aftermath of the pandemic. There is already a foreclosure moratorium on all federally backed mortgages, which are two-thirds to three-quarters of all mortgages. Collections of student loans have hit the pause button. There is support across the political spectrum for state moratoriums on debt collections and rent evictions. All these initiatives will collectively reduce the immediate pressure on people to declare bankruptcy. Moreover, most people will look to weather the initial storm in the expectation of bigger government support.

The real problem will start manifesting only after a few months when the actual economic impact will trickle down across all strata of the society. There is a difference between being financially distressed and filing for bankruptcy. Once the economy is on a road to recovery, the filings for bankruptcy will start trickling in after people have carefully weighed out all possible options of mitigating the onslaught of the pandemic. Surprisingly, recession has not always been associated with filing of bankruptcy. The largest surge for bankruptcies was recorded in the 1990s when the economy was in a boom. Bankruptcy filing by Long Island bankruptcy lawyers, was at its lowest ebb in the United States just before the virus stuck.

The current situation is simply without precedence. The financial devastation of the Great Depression unfolded over many years. The closest precedent is the Spanish flu pandemic of 1918, but the consumer credit system didn’t exist then like it does today. It is only to wait out for the situation to unfold before New York Bankruptcy lawyers can give out an exact estimate of the unfolding situation.

Ensuring Food Safety in a Pandemic

These are not easy times for the food and packaging Industry. The entire farm-to-fork production and delivery chain has been put under tremendous stress with major virus induced disruptions. For food manufacturers, the implementation of social distance rules have brought in a collateral damage to business prospects as this has severely handicapped the entire workforce. Regular inspections by FDA and USDA have been put on hold. This unprecedented situation has presented a unique opportunity for businesses – this is the time to go for fully automated production and remote monitoring mechanism with minimal human intervention. An establishment of a proper mechanism in consultation with food lawyers will ensure a strict adherence with the PACA law and other food safety laws.

While there is yet no evidence that COVID – 19 can be transmitted through food packaging; there are always chances of the virus staying alive on a surface for a few hours after coming into contact with an infected individual. In the meanwhile, food supply operations have been classified as essential services. This basically means continued operations in the face of severe challenges with adequate protective mechanism. 

The Way Forward 

It is imperative for food safety teams to continue operations in manufacturing units while looking at possible ways at minimizing virus exposure and health impact on staff. Food safety guidelines have been recently published and it stresses mainly handwashing, employee hygiene, following SOPs and GMPs, avoiding contamination and following well established food safety management practices and programs. The bottom-line is to ensure proper hygiene in accordance with the food safety laws across the entire chain which is expected to keep the virus at bay. Installation of adequate working mechanism in consultation with food safety lawyers will go a long way in this fight against the pandemic.

Why Hiding Assets in Bankruptcy is Bad

Faced with the predicament of bankruptcy litigation, its common to see people opting for various avenues to safeguard as much as assets possible. Hiding assets is primarily one of them. Whenever you file for bankruptcy in New York City under Long island bankruptcy law, it is mandatory to inform the court about all assets currently being owned. In some cases of bankruptcy certain assets are sold to adjust against claims of creditors. While certain types of assets are exempt from being seized, most existing assets not necessary for survival are taken over by creditors. In such a scenario it has been observed that individuals filing for bankruptcy tend to suppress details about assets they actually own  This presents the opportunity to wipe off all debts while safeguarding high value assets from being seized from creditors. If you consult New York bankruptcy lawyers, you will always be advised that this is not actually a smart idea. 

It is only in very rare and exceptional cases that some courts allow persons with zero or very low assets to file for bankruptcy and clean off their debts. In such cases the creditors get nothing out of it. This is the only legal way to get rid of debt without paying a penny of it back. From transferring ownership of property to family members, to shifting ownership of inherited property to distant relatives, there are many ways tried out by people in financial distress. It's never advisable to go for the easy way out by hiding assets and trying to artificially create such a scenario. 

There are in fact, a certain range of properties which are exempt from seizure during bankruptcy litigation and it makes no sense to try hiding it. This includes household appliances, pensions, jewelry upto a certain value, vehicles upto a certain value, necessary clothing and household items, pensions, public benefits and personal injury damage awards. The creditors can't touch the above mentioned items for recovery of debts and they stand safe and secure.

What are the primary items which are not exempt according to New York bankruptcy law and are prone to hiding? These include cash, family inheritance, vacation stay homes, second vehicles, stocks and bonds, bank accounts, retirement benefits, co-owned assets, rewards from other types of lawsuits. These items can be seized to pay off the debts. 

Why Hiding Assets is a Bad Idea?

When an individual or a couple file for bankruptcy, their case is assigned by the court to a trustee. This trustee pours through all recent transactions, bank account details, online activities and footprints, ownership documents, buying and selling deeds, family wills, tax returns, etc. Information is gathered and built up through scientific search, forensic audits and examination of online trails. If it is discovered that major assets have been willfully diverted or hidden prior to declaration, this can severely impact the bankruptcy proceedings and can also result in a denial of bankruptcy by the court. This means that you will stuck with all your debts and will have to deal with creditors all on your own and cannot file for bankruptcy for a long period of time. 

The best course of action is to consult experienced New York Bankruptcy Lawyers and discuss on how to maximize your assets from being seized in a perfectly legal way.