For Kentucky residents and people across the United States, the ongoing health crisis has resulted in a litany of challenges. People have lost jobs or had their income reduced; they may be confronted with massive medical expenses; and many have relied on credit cards to make ends meet. This has resulted in financial concerns in the present and future. On the surface, this might lead to a perception that there would be a spike in bankruptcy filings. However, the numbers tell a different story. Those confronted with financial worries should be aware of what these statistics may mean and act accordingly to address concerning debt.
Bankruptcy filings the lowest they have been in 15 years
According to research by Epiq, January 2021 had the fewest overall bankruptcy filings since 2006. That includes personal bankruptcies under Chapter 7 and Chapter 13 as well as business bankruptcies under Chapter 11. There were 26,617 filings in February 2006; in 2021, there have been 32,298. This is also a 6% reduction from December 2020 and 44% fewer than January 2020.
Chapter 7 had a 6.5% decrease for January with a total of 21,225. For Chapter 13, there was a 4% reduction with 8,972 filings. Because there has been a steadying of unemployment rates, analysts believe that people are able to pay their debts. Also, the recent stimulus payments and the apparent expectation that a new stimulus is on the horizon is helping debtors stay ahead of their bills. Even with these positive signs, there is concern that the second half of the year will see a rise in bankruptcy filings. This is believed to be due to consumers and businesses taking a wait-and-see approach to how the economy recovers.
Bankruptcy can help with getting on stronger financial ground
The pandemic and its ramifications remain cause for financial concern and people who have overwhelming debt might want to think about the benefits of Chapter 7 or Chapter 13 bankruptcy. Currently, debtors are in a holding pattern. Still, medical debt, accrued credit card bills and lost employment may eventually impact many people.
While there is often a reluctance to file for bankruptcy, it is important to understand that it is a perfectly legal strategy to clear unsecured debt and retain certain properties. Whether it is a Chapter 7 liquidation or a payment plan through Chapter 13, it can be effective to help get into a better financial position. To understand the available alternatives, experienced legal professionals can provide advice on how to proceed.