The latest COVID-19 news predicts that there will be a rash of bankruptcy filings in the coming months. Financial experts see many problems on the horizon as benefits and restrictions expire and no end in sight regarding the virus.
There’s reason to be hopeful, but much of the damage is already done. People have fallen behind on bills and the impact of coronavirus is being felt across the United States.
What do you need to know about COVID-19 bankruptcy and will you be a part of the 2021 trend of filing for bankruptcy because of the virus?
As of mid-fall 2020, the total number of bankruptcies filed for the year was fewer than the number filed in 2019. Financial experts believe this is due to the federal stimulus money issued earlier in the year and the other relief offered through the CARES Act and other government programs.
You can learn more about the CARES Act here.
It could also be because people are spending less on recreation and travel, and are borrowing less money.
But this conservative trend might not continue. As more and more businesses close and the unemployment rate rises, more people could face the dire situations that lead to bankruptcy. This is especially true if Congress fails to pass any further support packages.
So does this mean more bankruptcies are on the horizon? And should you be concerned?
It depends on your situation, but those following COVID-19 news aren’t optimistic. Some predict a bankruptcy mushroom will bloom in 2021, if not before. And the financial challenges of the virus are expected to spread, affecting financially stable people as well as those already in difficult situations. Some bankruptcy lawyers even report they are already working with people who never imagined themselves filing for bankruptcy before the pandemic.
People facing drastic financial decisions weren’t elaborate spenders or people who lived beyond their means. They believed their jobs to be secure, at least before the pandemic. COVID-19 alone has driven them to the brink of financial disaster. Like the vast majority of people, they were unprepared and now they are realizing their lives have been changed forever.
The good news is there are things you can do now to ease your burden in the coming months.
First, realize that COVID fallout might affect you even if you’ve been “safe” thus far. The economy is unpredictable and even those with secure jobs could face unexpected situations in 2021. Do your best to not take on any more debt than you have already. And once you have emergency savings in place, focus on paying debt down as much as possible.
Second, if you are already experiencing financial challenges, take an aggressive approach to deal with them. Be proactive and don’t ignore the financial trouble that is building. We’re not in a situation where we can hope for something unexpected to happen and drag us out of the financial fires. Financial experts believe COVID-19 news is likely to get worse before it gets better, even if it doesn’t get worse by a lot. There’s no sense prolonging the inevitable if you’re in a dire situation.
If you are struggling with debt and concerned about where we’re headed, it might be time to speak to a bankruptcy attorney. Filing for bankruptcy can’t eliminate the problems we’re facing completely, but it might provide some relief for your specific situation. For more information or to schedule a free consultation, contact the Law Office of Robert M. Geller at 813-254-5696.
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