We have seen it with the retail and travel industries - bankruptcy is on the rise due to the coronavirus pandemic. But, businesses are not the only entities suffering during this economic downturn. Individuals and couples are feeling the crunch, too.
Waiting to See What Happens
According to National Consumer Law Center John Rao, people most likely will not file immediately. He says the pandemic will result in an increase of personal bankruptcies, but he cannot say when that will happen. People are sitting on the edges of their seats, waiting to see what happens. Some are desperately anticipating the possibility of another stimulus check from the HEROES Act, while others are hoping the additional federal benefits for unemployment get extended. Bankruptcy is not an option when there are so many unknowns.
Will America Regress?
According to Marketwatch and the American Bankruptcy Institute, in 2010, nearly 1.6 million bankruptcies were filed. US Courts boasted that bankruptcies were on the decline in April of 2019, as bankruptcies had decreased to less than half of the number of individuals and couples who filed back in 2010, with a grand total of 770,000 bankruptcies in 2019. With millions of Americans filing unemployment every week now and debt loads increasing as the jobless struggle to pay bills, bankruptcies are certain to rise.
Self-Employed & Small Businesses
Owners of small businesses, especially retail stores and restaurants, have been impacted drastically by the pandemic. Safety guidelines are not only costly, but they also affect every step of operations. Many of these small businesses were forced to close down due to restrictions imposed by the government or rearrange their operations to only delivery or pick-up services. Even when the restrictions were lifted, phase by phase, these businesses were forced to limit their capacity, making it beyond difficult to recover economically.
Furthermore, due to uncertainty about finances, fewer people are dining out and shopping. According to Coresight Research, 2020 could see more than 15,000 closures of retail stores, which is higher than the record last year. Apparel industries are expected to take one of the hardest financial hits. Gap Inc. is temporarily closing a number of locations and reducing store hours and Walmart has announced store hours will be reduced, as well. Urban Outfitters, Nike, Abercrombie & Fitch, and Apple have all closed their doors.
Landlords Facing Economic Struggles
Real estate has also been hit hard. States across the U.S. have initiated eviction moratoriums, but when landlords are unable to collect rent, they cannot pay their mortgages, property taxes, and property insurance. Those who own larger apartment complexes might be forced to lay off maintenance workers. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided assistance for landlords, but only certain property owners will receive help. Their mortgage loan must be federally backed, leaving many in a bad situation.
Medical Bills Due to Coronavirus
The American Journal of Public Health determined that medical issues led to 66.5% of bankruptcies in 2009. Those who have checked into the hospital for coronavirus treatment have racked up thousands of dollars worth of medical bills. Starting with the ER visit, possible ambulance costs, and then blood testing, flu test, X-Rays, overnight stays, it can all add up to phenomenal bills that deplete savings accounts and increase debt.
Add up all of these factors and we can expect bankruptcies to be on the rise again. If you have been considering bankruptcy, but holding off to see what the future holds, you should speak to a bankruptcy attorney as soon as possible. Filing bankruptcy can put a stop to a variety of collection actions that can make your financial situation worse. Waiting is simply putting off the inevitable.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.