Consumer bankruptcies are always driven by each person’s individual situation — but economic issues throughout the country and other external factors can be a significant driving force that causes bankruptcy filings to ebb and flow dramatically.
In 2020, consumer bankruptcies dropped dramatically from 2019. Chapter 7 filings dropped 22% and Chapter 13 filings dropped a remarkable 46% — staying well below 40,000 filings per month throughout the majority of the year.
That trend now seems to be shifting, and a wave of new filings may soon be coming.
New reports indicate that consumer bankruptcies are on the rise
March and April of this year saw a spike in personal bankruptcy petitions that moved the needle up past the 40,000 mark once again — and the total represents a 16% increase over the prior seven-month average.
Analysts believe that more bankruptcy petitions are coming soon — but they say that economic conditions in the nation are still too fluid to be certain what’s going to happen.
Why the sudden shift toward bankruptcy after a year of relatively few filings? It’s all speculation, but there are several possible factors in play:
- Some consumers may have been in “financial shock” over the last year due to abrupt shifts in their employment status. Many may just now be starting to determine whether they can recover (or not) from their financial misfortune.
- Some consumers are just now seeing massive medical bills roll in from the last year. Since medical bills are the driving force for many consumer bankruptcies, some may be waiting until they feel like they’ve gotten through the health crises that caused their problems.
- Some consumers may have been living on savings and equity pulled from their homes. If that has been the plan for the last year while they hoped for economic recovery, they are just now reaching the end of their financial ropes.
Whatever the cause, one thing is for certain: If you’ve suffered significant financial problems over the past year, you’re not alone. Bankruptcy is a viable option for many people. It gives you a way to tackle your debt head-on. Learn more about the process today by speaking with an attorney.