PORTSMOUTH, Va. (WAVY) — J. Crew, Ann Taylor, Pier 1 and Lane Bryant all have two things in common: They are retailers, and they all filed for bankruptcy in Virginia during the coronavirus pandemic.
When businesses want to file for bankruptcy, they need to file in a state where they do business. More and more, that state has been Virginia, especially for big-name national retailers.
Meanwhile, a financial adviser says personal bankruptcy can work for some people, but it shouldn’t be your first option.
“The courts in Virginia have shown a willingness during the pandemic to work with these retailers,” says Doug Milnes, a Chartered Financial Analyst with MoneyGeek, the organization that commissioned a study that ranks states when it comes to business and personal bankruptcy filings.
Its data shows that Virginia trails only New York, Delaware and Texas when it comes to the rate of Chapter 11 filings during the pandemic.
“Back in 2008, Circuit City went through bankruptcy and that really put the Virginia bankruptcy court on the map for retailers,” Milnes said.
And on an individual basis, is personal bankruptcy the way out from under a mountain of overdue bills? Milnes says take other steps first.
“If you’re in tough straits you should be reaching out to obviously your creditors, but the next person you should be reaching out to is an attorney.”
The study showed Virginia ranked 16th for personal bankruptcies, with more than 6,700 filed since the pandemic began. Milnes expects that number to accelerate unless some of the federal pandemic relief is extended.
The American Bar Association has an anonymous service where you can contact a volunteer attorney, and legal aid programs can also help. Not everyone emerges from personal bankruptcy, and expect your credit score to take a major hit.
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