While many personal bankruptcy filings have been delayed due to government programs and help during the pandemic, it is expected that bankruptcy filings will increase over the next 2 years. The pandemic will have lasting effects on many American families.
Bankruptcy Delayed in 2020
The number of bankruptcies filed in the last half of 2020 is down from previous years due to government help through:
· $1,200 stimulus checks
· Paycheck Protection Program
· Student Loan payments halted
· Evictions and foreclosures delayed
· $600 per week federal unemployment checks
· Small business loans
This assistance during the pandemic is keeping Americans afloat for now. But how long will these federal programs last? And how long will the effects of the pandemic last? We don’t know the answers to these questions, and that could leave you feeling uncomfortable and panicked about the future.
Bankruptcy Pros and Cons
The predicted increase in bankruptcy filings leads to many questions on whether bankruptcy is the smartest decision for you. Here are some pros and cons:
Pros:
· Able to keep assets like cars and home
· Fend off collection calls
· Clear or reduce debt, leaving you with a clean slate
· Avoid wage garnishments or utilities being shut off
Cons:
· Stays on your record for 10 years
· Hard to get new loans and start again
· Public record that can be seen by potential employers or creditors
When you are in dire financial need and cannot find an alternative, bankruptcy may be the option for you. The fresh start without debt is freeing. The most important thing to learn is to not fall into the same habits again. It may be challenging to fall back into debt since you will find it more difficult to secure loans. But educating yourself on money management and living within your means will protect you from filing for bankruptcy a second time in the future.
If you feel desperate and consider bankruptcy an option, ask Miles & Hatcher, LLP, for help. Our experts can help you decide your best plan of action for getting through the pandemic's economic challenges. Give us a call to set up a free consultation: (909) 481-4080.