Understanding recent bankruptcy trends: A guide for financial recovery

An understanding of bankruptcy trends can help those who struggle to make ends meet find options to help regain their financial footing. The recent economic conditions, influenced by global events such as the pandemic, have led to notable trends in bankruptcy filings, including:

• Increase in filings by small businesses: Many small businesses, particularly those in the retail and hospitality sectors, have faced insurmountable financial stress leading to an uptick in Chapter 11 filings.
• Growth in personal bankruptcy: Economic instability has also led to a rise in individuals seeking relief through both Chapter 7 and Chapter 13 bankruptcy filings.

Understanding these trends provides a clear picture of the financial pressures faced by both individuals and businesses, highlighting the role of bankruptcy as a tool for financial reorganization and relief.

What are the current bankruptcy trends?

The most recent data from the Administrative Office of the United States Courts provides an analysis of bankruptcy rates from 2023. As noted above, experts explain that this information has shown a significant increase in bankruptcy filings last year — with an increase in filings of over 40% for businesses and 15% for individuals.

Experts point to inflation as a driving factor for this recent spike, noting that rising expenses  paired with the end of many pandemic related relief programs was often more financial stress than many businesses and individuals could manage.

When is bankruptcy the right choice?

Bankruptcy can be a strategic decision to regain financial stability. It may be a wise move for those who face persistent debt pressure where debt payments consume a significant part of income, leaving little for basic needs. Those in this situation can find bankruptcy offers a fresh financial start because it can eliminate eligible debts and halt creditor actions. More specifically, bankruptcy can discharge unsecured debts, such as credit card debt and medical bills, freeing up resources for other financial obligations while also activating an automatic stay that stops most collection activities, including calls, lawsuits, and wage garnishments.

Bankruptcy is a legal tool that restructures one’s financial foundation. For some, it can provide a structured debt repayment plan. This can occur under a Chapter 13 filing, which allows individuals to reorganize their debts and plan manageable payments, while keeping their assets. Bankruptcy can also offer a chance to rebuild credit. Post-bankruptcy, individuals often find it easier to start rebuilding their credit scores with a cleaner slate.

For individuals and businesses struggling financially, understanding bankruptcy and its recent trends is invaluable. It not only illuminates the paths taken by others in similar situations but also demystifies the process, allowing for informed decision-making. Recognizing when bankruptcy is the right choice can be pivotal in securing a fresh financial future, free from the overwhelming burden of unsustainable debt.

Anyone considering bankruptcy should consult with an experienced bankruptcy attorney. Our Miami bankruptcy attorneys have experience with the process and can help people identify their assets, debts, and exemptions so you can choose the type of bankruptcy that suits your circumstances. It costs you nothing to schedule a free consultation with one of our experienced Miami bankruptcy lawyers to discuss how Florida bankruptcy laws can help you.