When COVID-19 closed down businesses and interrupted company operations, financial experts predicted that a rise in bankruptcy filings in 2021 was inevitable. However, when all was said and done, there were fewer personal or corporate bankruptcies than the industry feared. But 2022 bankruptcy statistics seem to indicate that the phenomenon was simply delayed. According to recent bankruptcy analytics, filings are up across all chapters.
As of August 2022, there were 35,355 bankruptcy filings across all chapters, representing a 10 percent increase from August 2021.
Here are a few additional bankruptcy statistics that may be of interest:
- Commercial filings increased by 6 percent from August 2021 to August 2022. (1,753 to 1,861)
- Individual filings increased by 10 percent from August 2021 to August 2022. (30,523 to 33,494)
- Commercial and individual bankruptcies have collectively risen by 15 percent month-over-month – from July 2022 to August 2022
- August’s personal bankruptcy filings showed a 15 percent uptick compared to the same category in July.
The above study findings were further pronounced by the revelation that all categories of bankruptcy are currently on the increase.
- Chapter 7 filings are up 13 percent, with 17,593 filed in July and 19,884 in August.
- Chapter 11 filings are up 81 percent, with July totals at 257 filings and August registering 466 filings.
- Chapter 13 filings rose 15 percent, totaling 14,981 compared to 12,992 registered in July.
Experts explain the rise across all sectors in debt loads, rising interest rates and inflation, and shrinking supply chains. Both companies and family groups are experiencing financial distress on many levels – and the landscape doesn’t look to be changing anytime soon. Although bankruptcy rates are still at levels considered historically low, the trends indicate that more people are once again turning to the relief that bankruptcy represents.
Why Filing Bankruptcy is the Answer
Individuals and corporations struggling to pay bills and stay solvent often try to survive as long as possible before taking advantage of bankruptcy as a solution. However, this strategy can backfire – typically, it is best to address the situation as soon as it becomes evident that income and outflow do not correlate. In other words, it is recommended that people move sooner rather than later to rectify their situation and get back on sound financial footing.
At this point, an end to inflation and rising prices cannot be predicted and could signal that tough times may be here indefinitely. Deciding to file bankruptcy may be timely for those already in crisis, and the ongoing trend seems to validate this reality. Of course, every situation is different and unique – and we always recommend that you speak to a trusted bankruptcy attorney regarding your situation before making your next move.
When Filing Personal Bankruptcy May Be Warranted
Here are some indicators to consider if you are wondering if you should investigate a personal bankruptcy filing.
- You are behind on mortgage payments or wish to stop the foreclosure process.
- You are at risk for vehicle repossession, especially if you need the vehicle for work.
- Your current income does not cover your debt payments.
- The Internal Revenue Service is threatening wage garnishment or seizure of a bank account.
- You are using credit cards to pay for necessities like groceries or utilities.
- You have maxed out your credit card balances and can only make minimum payments.
- You are relying on cash advances to pay off debt balances.
- You need to use retirement accounts to make payments.
- Creditors are harassing you continually – or they have officially filed suit against you.
The current economic climate has made it difficult for individuals from all walks of life. If you are considering bankruptcy, remember that you are far from alone, and the bankruptcy statistics prove that. The law offices of Richard V. Ellis take great pride in our track record for helping Sarasota area residents and small business owners to navigate the complexities of bankruptcy, and we are ready to speak with you today.