Floridians might have muddled through financially in 2020 even with the ongoing health crisis negatively affecting their employment, causing medical expenses and fundamentally changing their lives in other ways. This is not uncommon across the nation. Ironically, despite the issues that have accompanied the crisis, people largely avoiding the worst-case scenario with foreclosures, repossessions, evictions and their finances growing so tenuous that they needed to file for bankruptcy. Still, the ability to avoid bankruptcy may not last forever. Debtors should know about the process and if it may suit their needs.
2020 had the fewest bankruptcies in 34 years
According to Epiq AACER, 2020 had the fewest overall bankruptcy filings since 1986. Business bankruptcies through Chapter 11 increased by 29%. Personal bankruptcies dipped substantially to the point that there was a reduction in the combined total of personal and business bankruptcies from an average of nearly 800,000 in the past few years to slightly more than 529,000 in 2020. In 2010, there were approximately 2.4 million total filings after the financial crisis.
It is believed that the health crisis which sparked government intervention to keep people afloat prevented an avalanche of filings. Even with the possibility of more aid being provided with the new presidential administration, researchers expect there to be an eventual spike in filings. The senior vice president of Epiq AACER says personal bankruptcies could start to increase by the second half of 2020.
How bankruptcy can help people with overwhelming debt
Bankruptcy is often negatively categorized by people who do not understand how beneficial it can be to clear debt and get on stronger financial footing. It is perfectly legal and the fear and concern that may accompany overwhelming debt and an uncertain future can be reduced.
There are key aspects of bankruptcy that people should be aware of such as whether they should file a Chapter 7 for a liquidation or a Chapter 13 with a payment plan; what properties they might be able to retain; how their credit will be impacted; whether they are eligible to file and more. Whether it is urgent and needs to be done immediately or the debtor wants to understand his or her options for the future, consulting with a firm experienced in all areas of bankruptcy may provide information, guidance and representation.