The Federal Reserve, economists, and financial advisors predicted a wave of bankruptcy cases that would hit once regulations were relaxed. However, the reality of the situation is not what anyone expected. Read our blog to find out more about the status of bankruptcy in the U.S. and predictions for the future.
Where Are All the Bankruptcies?
In 2020, countless relief packages were deployed to help Americans deal with the hardships caused by the pandemic. Families with children received a tax credit to help with school and childcare, small businesses could take out special loans, and student loans were put under a moratorium. States also issued their own relief packages as well.
Most of these programs proved to be just what the public needed to hold steady while the world shut down. However, many Americans continued to struggle with debt and had no other choice but to file for bankruptcy. Economists saw this trend and predicted that many more bankruptcy filings were to come.
However, the number of bankruptcy filings in 2021 fell well below the projections. In fact, while the number of flings reached 400,000, the total number is lower than 2019 records show. This is great news for many people, but with this new information comes another warning from economists: the number of bankruptcies could rise post-pandemic.
Why the Increase?
There are many reasons why bankruptcies could skyrocket over the next year. Inflation is at the highest rate in over 40 years. This means that consumers are paying higher prices for gas and groceries than they have in their lifetimes. Rent and living costs are also on the rise and a 1970s era recession looms over Americans.
The recent cryptocurrency market crash has left investors floundering and some drowning under their losses. Other tech bubbles like the NFT market are bursting which could mean financial distress is in the near future for investors and minters alike.
There are also pockets of COVID that continue to take lives and infect. Families struggling after missing work and needing childcare are at a loss for what to do. Additionally, people who were hospitalized for severe coronavirus infection are grappling with medical bills, missed wages, and other bills they simply cannot pay.
Options for Debtors
Debt is a uniquely painful hardship. Many people struggling with debt feel hopeless, like there are no options or relief from their struggles. While debt can be all consuming, bankruptcy is a legal, viable option for those with debts they cannot feasibly pay off.
Bankruptcy gives those struggling with debt the option to liquidate some assets or keep their assets and reorganize their debt to repay them with an extension. Filing does have an impact on credit scores, but with careful credit moderation and a plan, credit scores can be rebuilt in a few short years.
The Law Office of Seni Popat, P.C. understands the toll debt can take on you and your family. Our firm has helped countless people find a pathway to debt relief. We can work with you to find a debt relief solution that fits your circumstances so you can build a future with confidence.
Contact our firm for more information.