The last year has been rife with unprecedented financial challenges for Pennsylvanians. People have lost their jobs, and businesses have had to close their doors, yet the bills keep coming. People are stretched beyond their means and considering filing bankruptcy.
Sources anticipated a spike in bankruptcy filings last year, but the number of filings actually dropped in 2020 for reasons we examine below. While that might be good news, reports suggest that the trend may be short-lived, as 2021 could be the year when more consumers file for bankruptcy protection.
Thirty percent drop in consumer bankruptcy
Last year saw the lowest number of bankruptcy filings since 1987. This statistic was quite surprising, considering that historically, consumer bankruptcies increase during times of high unemployment rates.
However, 2020 was unusual, and the decrease in filings likely stems from:
- Stimulus checks
- Higher unemployment benefits
- Moratoriums on evictions and foreclosures
- Suspension of loan payments
- Court closures
Changes in consumer behaviors could also have an impact. Last year, people may have been more mindful of their spending habits. And with fewer opportunities for travel, shopping and other financial expenditures, people may have had less to spend their money on.
Looking ahead in 2021
Although 2020 is behind us, the problems we faced will not disappear with the start of a new year. For some people, the financial assistance will come to an end, if it hasn’t already. And the beginning of any year is economically challenging as people recover from the holidays.
Thus, the bankruptcy spike people expected to happen in 2020 may happen in 2021.
Preparing for bankruptcy
If you suspect that filing for bankruptcy may be in your future, now can be the time to prepare accordingly. Collect pertinent documentation regarding your wages and expenditures and put together an inventory of your assets.
You should also examine the different types of bankruptcy. Depending on the debts you carry, you might be able to repay them through Chapter 13 bankruptcy, or you might seek to discharge all eligible debts through Chapter 7.
This can be an overwhelming process, but you need not go through it alone. You can schedule a free consultation with an attorney at the Quinn Law Firm by calling. We can discuss your situation and your options so that you can make informed decisions about your future.