Since COVID-19 has made its way into America, the Ohio Department of Job and Family Services has paid out nearly $32 million to 105,000 claimants of unemployment. In one week, the state had more than 185,000 files for unemployment. With the novel coronavirus still wreaking havoc across the nation, there’s no way to know when many Americans will get back to work. This is obviously a large problem for the total economy. But what happens if you are someone who has been laid off because of COVID-19 and you were also filing for bankruptcy?
In many cases, if you are collecting unemployment, that payment is protected under the Social Security Act and therefore, not subject to income under bankruptcy filing. In addition, under 4141.32 of the Revised Code in Ohio, unemployment compensation benefits are exempted.
However, there are risks as things can go wrong. If you have one account which all funds go into, it may become difficult to distinguish between what is in the account from unemployment and what is flexible income. While you can show how much you receive in unemployment benefits, once that money is co-mingled with others in an account, the courts will have a difficult time distinguishing how those funds are spent.
So what can you do?
Unemployment is exempt in bankruptcy. But commingling accounts will make it difficult for you to prove this. To protect yourself, you need to create an account just for your unemployment, social security benefits.
If you have not yet begun the bankruptcy process but are considering it, we suggest you make a separate account immediately. Also, request that money be deposited via direct deposit so your bankruptcy trustee can see exactly where the money is coming from. Not only will it stop commingling, but it will also protect you from having creditors come after your Social Security benefits.
However, if you have already filed bankruptcy, you do have other options. In Ohio bankruptcy, there is the wildcard exemption which allows you to protect up to $1,325 of any personal property of your choice.
Right now, everything is uncertain. And when you have already been facing financial hardships, COVID-19 layoffs are enough to make you go mad. But don’t go at it alone. Right now, we can go over bankruptcy repayment plans during COVID-19 in addition to ways you can protect your unemployment benefits from creditors.
We know this is a challenging time. But we want to help.
Due to the outbreak of COVID-19, Jones Law Firm is offering free initial consultations by telephone.
Coronavirus has taken the entire world by surprise, and left many unemployed and considering bankruptcy just to stay above water. If you are experiencing financial distress or the burden of debts you cannot pay due to COVID-19, we encourage you to contact The Jones Law Firm for a free consultation about how we can help you through this difficult time. With offices in Reynoldsburg, Ohio, The Jones Law Firm works with clients in and around Columbus and throughout central Ohio. Our attorney is available to work with you remotely to protect your financial and health interests.