Personal Bankruptcy Filings in the United States
The COVID-19 pandemic undoubtedly had an impact on the personal finances of millions of people.
Forced shutdowns within cities and towns of assorted businesses combined with the critical impact on certain industries such as hospitality and travel have had an effect. Economists will be discussing the pandemic’s effect worldwide and here in the United States for years to come including the number of personal and business bankruptcies.
Government Assistance Provided Temporary Help
The number of personal bankruptcy filings did not increase as much as some experts predicted in 2020. This is largely due to stimulus checks from the federal government and the extension of unemployment benefits. While some conservative critics argued that too many benefits were given to American citizens, for many individuals and families having access to federal money during this time enabled folks to keep up with their bills and avoid filing bankruptcy when they might have otherwise had to do so.
Additionally, legislation was passed that stopped evictions by landlords and that meant that some tenants could stay in their rented homes without having to pay their monthly rent, the rent they could not make when they were suddenly unemployed. But this stoppage ended, and evictions began to increase. Foreclosures were also increasing as families struggled to meet mortgage payments. American families began seeing the impact the pandemic had on their ability to pay off debt, hold onto their homes and possessions, and meet their financial obligations.
In 2022, Americans started to see inflation at a rate that many adults have never seen in their entire lifetimes. Everything seems to be more expensive now than it was last year, from new cars to infant formula. Job wages have not done a good job of keeping up with this rate of inflation. This means that every dollar you earn has less buying power. This makes it more difficult to pay bills each month.
Working at Home Not Always an Option
For office workers able to work from home and therefore keep steady employment throughout the pandemic, shutdowns and the pandemic restrictions might not have had much of an impact on their personal finances. However, not all jobs are possible in a work-from-home format.
Retail employees, hospitality staff, and those in the entertainment industry had their hours cut, were terminated, or had their employers go out of business. Look around- how many businesses did you go to that are no longer in business since the pandemic began? Restaurants, salons, gyms, Mom and Pop retail stores – are gone!
Furloughs and Terminations
As industries, including aviation, travel, entertainment, and retail, suffered through the pandemic, many employees faced furloughs and terminations. This made it difficult for those impacted to pay their bills. Savings began to be depleted and solutions began to become scarce. The federal government’s stimulus checks were not nearly enough to cover lost income during the pandemic. As a result, filing for personal bankruptcy began to be a good way out. Bankruptcy is simply a tool that everyone can use when necessary.
Unexpected Loss of Income or Covid Related Medical Expenses
To date, more than one million Americans died from COVID-19. Many of those people had families that relied on their income. Those families had to figure out how to survive financially after they lost the main breadwinner.
COVID-19 is a costly disease to treat in many cases. While some insurance policies had limits to how much of the expenses they’d push off to the patients, there is no doubt that the high costs of ongoing and/or intensive medical treatments were more than many people could manage on their own.
People get into financial hard times due to situations like this – sudden loss of income or overwhelming medical expenses. If this is your situation, you may be a good candidate for that fresh financial start.
Contact a Minnesota Bankruptcy Lawyer
According to Reuters, the total number of personal bankruptcies grew 34% between February 2022 and March 2022. The number of bankruptcies is expected to increase as the assistance of stimulus programs and other forms of pandemic aid end while the US economy continues to struggle with inflation, high oil prices, and job shortages.
If you or a loved one are in this situation because of the COVID-19 pandemic, you are not alone. Fortunately, there are steps that you can take, including potentially filing for bankruptcy, that can help. Bankruptcy is simply a legal process that can relieve you of the responsibility to pay back certain debts or, in the case of a Chapter 13 bankruptcy, enable the reorganization of debt payments. Let us help. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form.