Bankruptcy Filings Will Be On The Rise
Statistics show that since the Great Recession filings for bankruptcies have been declining. At their peak, more than 1.5 million people filed for bankruptcy in 2010. Since that time, bankruptcy filings have consistently declined. In fact, only half as many bankruptcies were filed in 2018. However, with the global pandemic of the COVID-19 virus, it appears that more Americans will be filing for bankruptcy in the near future.
Why Bankruptcies Will Rise
Bankruptcies will rise for many reasons. The first reason is that many people that were already on the brink of financial crisis may be pushed over the edge due to employment and economic concerns. In other cases, employers are simply unable to continue to pay their workforce at the same rate or were forced to furlough their employees. In some severe cases, employers were forced to completely let go of several of their employees or even shutter their doors permanently. The last few weeks have shown over 36 million Americans filing unemployment claims. As the unemployment system attempts to handle this new influx of employment claims, many American workers are simply without financial options to pay the necessary bills. As these workers continue to wait for their unemployment claims to be processed, many will begin to consider bankruptcy as an option for them.
While the workers of America struggle financially, so are the businesses throughout the United States. With so many areas enforcing quarantine and stay-at-home orders, many businesses in the past few months have reached points where they may never be able to open their doors again for business. A recent Time magazine article highlighted the fact that many small businesses will be unable to open again, and those that do will likely consider bankruptcy as an option. When businesses shutter their doors, or declare bankruptcy, there is a little leftover for their workers. When businesses declare bankruptcy, oftentimes their workers will declare personal bankruptcy as a result when their job is lost. Even the workers that do get their jobs back will feel severe Financial stress, resulting in the possibility of still having to declare bankruptcy.
Household Debt Burden
One of the most reliable indicators regarding the rate of future consumer bankruptcy filings is the comparison between the amount of household debt and the delinquency rate in paying that household debt. Research shows that the current delinquency rates regarding paying household debts are similar to that prior to the Great Recession. These statistics provide a window into the future regarding the likely surge in filings of personal bankruptcy to come following the COVID-19 global pandemic.
Let Us Help You Today
Many people are feeling financial stresses during this time of a coronavirus epidemic. If you are considering filing for bankruptcy due to your financial situation, contact us for a consultation to see how an experienced West Palm Beach bankruptcy attorney at Kelley Fulton Kaplan & Eller at 561-264-6850 can help you understand your legal options.