This coronavirus is causing Americans to make tough decisions. Unfortunately, everyone’s financial situation is unique and the “right answers” are different for everyone. Some Americans already have access to home equity lines of credit or personal loans. Some Americans have credit cards as an option to bridge the gap. Others may only have a small amount of money in the bank. Some Americans are expecting large tax refunds that will help pay their household bills for the next month or so, but other Americans might owe the IRS with little ability to pay their tax due.

While it is hard to say how individuals should bridge this gap, the point is to prioritize where you get your funds from. In short, make your retirement funds an absolute last resort. Do not do any early distributions unless you absolutely have to as you create taxable income (plus penalties in most cases) and you eliminate protected money that is out of reach to your creditors.  Otherwise, trust that many Americans are in the same boat as you and are scared of what the future holds.

Finally, do not rule out bankruptcy as an option.  If you already are saddled with debt, the silver lining here is that bankruptcy may make you much stronger financially as we start to emerge from this crisis.  Credit cards, medical debt, and personal loans are all addressed through bankruptcy.   And, because of income reductions, many individuals who did not qualify for “fresh start” bankruptcy relief now qualify.

Contact Ross, Quinn & Ploppert and let us explore if bankruptcy will put you in the best position to bounce back from this crisis financially stronger than ever.