How Inflation Affects Bankruptcy Cases
South Florida residents and Americans across the country are grappling with the effects of inflation. Indeed, according to a recent report from CNBC, in September 2022, prices rose by about 0.4 percent, which means that total prices had increased by about 8.2 percent from this same time last year. In addition, worker wages have fallen. Taking into account inflation, workers in the U.S. are earning on average 3 percent less than they were this same time last year, and costs of food and energy are particularly high. As the CNBC report underscores, the amount of inflation over the last year is the “biggest 12-month gain since August 1982.” In other words, Americans have not experienced this type of inflation for 40 years. Given that many Florida residents and Americans throughout the U.S. were already struggling financially due to the effects of the pandemic, inflation could lead to an increase in bankruptcy cases.
Whether you are thinking about bankruptcy or you are struggling with debt and trying to avoid bankruptcy if possible, you should consider some of the following information from our West Palm Beach bankruptcy attorneys.
Determine Your Personal Inflation Rate
In order to have a better understanding of how inflation is impacting you and your household, and whether it may be necessary to speak with a bankruptcy attorney about your options, it is important to understand your personal inflation rate. While you can learn that inflation is at 8.2 percent, and you can read about specific inflation rates for food products, electricity, and other necessities, you should remember that inflation affects people differently based on their individual needs and spending habits. Accordingly, you should determine your personal inflation rate to have a better sense of whether your income and assets will be enough in the near future to allow you to pay your mortgage and your other bills.
According to an article in Forbes, you can determine your personal inflation rate by looking at your bills at the same time last year and totaling that amount. Then, you can add up your bills for the current month, and subtract the total from a year ago from your current total. Next, take the difference and divide it by your current total of bills. For example, if your monthly bills totaled $2,550 at this same time last year and now total $3,000, you would have a $450 difference. Take 450 and divide it by $3,000 to get your personal inflation rate of 15 percent.
You May Be Able to Reduce the Effects of Inflation
You cannot do anything about inflation, and you cannot take any specific steps to lower the costs of food and energy that are impacting your household. However, you may be able to reevaluate other expenses you have, and you might be able to take some steps to reduce other costs in order to account for inflation. For example, you can consider doing balance transfers on a credit card, and keeping better track of your bills to avoid late fees.
Depending upon your financial circumstances, you may be unable to see a path forward in which you can pay your bills with your current income and assets. In cases like these, it may be a good time to consider bankruptcy. As the articles in CNBC and Forbes suggest, more bankruptcy filings may be on the way for consumers as a result of inflation.
Contact a Personal Bankruptcy
If your personal inflation rate is unlikely to allow you to make ends meet in the coming months and beyond, you should seek advice from an experienced West Palm Beach Bankruptcy attorney at Kelley Kaplan & Eller who can help you.