Individuals and businesses in Florida and across the United States have experienced a dramatic downturn in their financial fortunes due to the ongoing pandemic. The overall impact of medical expenses, business closures, job loss, financial challenges and personal disputes is still unknown. Those whose debts are overwhelming should be aware of how bankruptcy might help with getting into a better financial position.
In 2020, bankruptcy filings declined
Even the statistics detailing how many individuals and businesses chose to file for bankruptcy in 2020 could muddy the outlook and how to assess it. For example, bankruptcy filings reduced in 2020 when compared to previous years. Still, this might not be as positive as it appears. Those who are considering Chapter 7 or Chapter 13 bankruptcy to help with their debt should be aware of the relevant factors when they decide if filing is right for them.
In 2020, bankruptcy filings declined to slightly more than 529,000 from nearly 757,700 in 2019. Of those filings in 2020, 496,565 were consumer filings. This is the fewest in 33 years and 31% fewer than in 2019. This is occurring even with the financial struggles people are experiencing because of the pandemic. It is believed that debtors have managed to stay one step ahead of their creditors for several reasons including stimulus payments from the government, moratoriums on evictions, and states – like Florida – reopening their economy earlier than others. A second relief package late in 2020 again helped debtors.
Still, bankruptcy is often a last resort and those who are deep enough in debt that it may be their only alternative try to avoid it for as long as possible. Many take several years before filing. An example is the financial crisis in 2008 when it took around two years for the expected spike in bankruptcies to come to pass. Even with the financial problems people are experiencing, there remains a fear of bankruptcy that must be overcome before moving forward.
Having experienced advice can help with understanding bankruptcy
Personal bankruptcy options like a Chapter 7 liquidation or a Chapter 13 wage earner’s plan can help to clear debt and restart a financial life. Chapter 7 will eliminate unsecured debt like credit cards and medical bills and let the person retain certain properties. Chapter 13 is like a consolidation loan where the debt is repaid incrementally over three or five years. This can allow a person to keep a home. When thinking about bankruptcy and if there are alternatives available, it is wise to consult with legal professionals experienced with the process to determine the preferable course of action.
