If you have seen the news at all lately, it appears to be more doom and gloom than usual. The COVID-19 pandemic persists. The economy is in a major slump. The impacts of social distancing measures imposed on business who have been able to reopen in the midst of the pandemic has had lasting impacts and businesses continue to struggle. Job loss has been rampant as a result. With all of this making headlines, it is no wonder that people are either in the midst of some serious financial struggles or are likely to have substantial financial struggles in the not so distant future. Fortunately, bankruptcy can provide relief from some serious financial strains and provide many with a fresh start.
Will the COVID-19 Pandemic Lead to a Flood of Bankruptcy Filings?
The American Bankruptcy Institute recently reported that there has been a 28% drop in overall commercial bankruptcy filings. While this is great news, it still makes many suspicious as to what is on the horizon. In the midst of the pandemic and subsequent economic crisis, there have been several critical federal and state pandemic-relief programs to try and stifle the losses felt by small businesses across the country. In fact, over 4.4 million small businesses accessed the Paycheck Protection Program (PPP) alone. In addition to the PPP, there have been $1,200 stimulus checks and $600 in weekly federal unemployment payments authorized. Foreclosures and evictions have been halted and forbearance on mortgage loans and credit card debt has been authorized.
On top of the relief packages available to individuals and businesses, there has also been reduced access to actually being able to proceed with a bankruptcy filing. Due to court closures as well as reduced access to bankruptcy attorneys because of social distancing measures, many who may have otherwise pursued bankruptcy may have been unable to or decided to delay moving forward. All of this is likely to have contributed to the drop in bankruptcy filings reported by the American Bankruptcy Institute.
The relief programs, however, are likely to come to an end in the near future. Courts are reopening. Law offices briefly shuttered are now opening up again as well. The economy, however, continues to struggle. Relief packages can only go so far and businesses may continue to take on debt, but still see significant decreases in profits. There have already been some significant bankruptcy filings by bigger businesses such as Stein Mar, California Pizza Kitchen, and Books Brothers. It is predicted that many more bankruptcy filings are in the future for businesses and individuals across the U.S. in the near future.
As we move towards this likelihood, keep in mind the pros and cons of bankruptcy. Yes, bankruptcy can impact your credit for upwards of 10 years, making it more difficult to obtain loans, especially loans that are not at high-interest rates. Bankruptcy does, however, help make debt repayment more manageable or will eliminate, or reduce debt, for those finding themselves in difficult financial situations. Bankruptcy will also stop collection efforts and foreclosures as well as wage garnishment and collection agency phone calls.
Miami Valley Bankruptcy Attorneys
Now and in the difficult months to come, Miami Valley Bankruptcy is here for you, your family, and your business. Talk to us about your options. Contact us today.