There’s little debate about the fact that the American economy is in trouble right now, mainly as a consequence of the coronavirus and subsequent nationwide shutdown of many businesses. Millions have lost jobs, and that will have long-lasting impacts even after the economy starts moving normally again.
Has the double-digit unemployment led to a surge in personal bankruptcy filings? The answer is no – at least not yet. In fact, this year has seen bankruptcy filings drop to their lowest point in 15 years. But according to news reports, that drop is related to a government benefit that expired at the end of July. Therefore, a wave of bankruptcies is expected soon.
An article in the New York Times noted that the federal government’s stimulus bill was the lifeline keeping many out-of-work Americans afloat. In addition to state unemployment benefits, those who lost jobs could collect $600 per week in federal benefits.
In some cases, this was more money than people were earning when working (which likely says more about stagnant wages than it does about the generosity of benefits). It was enough money for many households to make ends meet and even pay down some of their debt.
Those federal stimulus payments expired at the end of July, and millions of Americans will now be without an adequate safety net. Because the Covid-19 pandemic is still in full swing and the economy will take much longer to recover, it should only be a matter of time before personal bankruptcy filings spike nationwide – perhaps to record levels.
If you have lost a job or experienced other financial hardship as a result of the Covid-19 pandemic, please know that your struggles are not your fault and that you are certainly not alone. Depending on your overall financial picture, bankruptcy may be right for you. Please contact an experienced bankruptcy attorney in your area to discuss all your debt relief options.