When the COVID pandemic necessitated lockdowns and closures, many people began to wonder about the effects on the economy. As those measures persisted for months, the concerns turned personal for many who were laid off, lost hours, or could no longer work. If you are under financial stress, which began during the pandemic, you are not alone. Millions of Americans are in the same situation.
However, you may think that you are still far from bankruptcy. After all, a bankruptcy filing is often the “last resort,” an action to be taken only if nothing else works out. But there are compelling reasons that those experiencing financial struggles should speak to a bankruptcy attorney sooner than they think.
Debt Grows Quickly
A recent study authored jointly by Brigham Young University and the MIT Sloan School revealed that the average person waits 22 months between their first 90-day past due notice – and filing for bankruptcy. During that time, the same study estimated that those individuals could go into further debt by over $4,000 per month. This situation is due to late fees, interest payments piling up, and the need to borrow from one card to pay another. When people do not have enough to pay every monthly bill, the slope is slippery and easy to fall down.
Those watching the economy had issued dire warnings throughout 2020 that a flood of personal bankruptcy was imminent. With so many people out of work or taking home less money, financial duress was inevitable – if the situation persisted. In fact, many people are still not working or not working to capacity.
Therefore, economy watchers were surprised to learn that bankruptcies dropped 30% year over year in 2020 – and in fact, that rate has continued into the first six months of 2021. However, given the average time frame of 22 months before people file, it is more relevant to keep an eye on the next 6-12 months to understand the personal economic implications of the pandemic.
Are You in Financial Difficulty?
The study revealed that people who ultimately file for bankruptcy admitted to being “under stress” for two years before filing for relief, either Chapter 7 or Chapter 13. During that time, as we stated, their debt was piling up, and they could find no way out of their situation.
While there are specific steps you can take to get out from under debt if your situation is short-lived, the longer you struggle, the worse it becomes. However, because most view bankruptcy as a last resort, it may not even come to mind unless the situation is entirely hopeless in their minds.
That is why it is essential to think of bankruptcy as an option much earlier in the process. You can consider a Chapter 7 bankruptcy – when your assets are liquidated – or a Chapter 13 bankruptcy when you restructure your debts legally with your creditors. Either of these processes can provide relief and a fresh start – and ease the stress you are under sooner rather than later.
If you struggle with debt and do not have a solid plan to recover, calling a bankruptcy attorney is a smart move. We can help you to assess your situation and determine if bankruptcy is an appropriate choice for you. At the Sarasota law offices of Richard V. Ellis, we have helped hundreds of local residents to find the debt relief they need, and we would love to help you.
Don’t live under the burden of this situation longer than you need to – call today, and let’s talk about how to solve the problem.