Financial challenges can happen to anyone in Florida. There are many reasons that this may be the case. It could be due to personal missteps, job loss, medical expenses or a combination. The current national health situation has placed many people in precarious financial straits. Some have been able to stay a step ahead of their bills. Others have been counting on government assistance and mandates that people be given time to get their affairs in order before collection actions and evictions commence. However, as the pandemic continues, people might need to consider bankruptcy to clear their debts. Having legal advice to consider this option may be vital.
As packages to help debtors stall, bankruptcies expected to spike
In early 2020, people were given enhanced unemployment payments and stimulus checks among other benefits. These have generally run out, reduced or stopped altogether. With that, financial analysts and experts believe that there will be a spike in bankruptcy filings in 2021. As the federal government negotiates a potential stimulus, people are increasingly facing financial challenges they cannot overcome. One expert says that the lack of liquid cash will undoubtedly impact the number of bankruptcies as people have run out of money.
In 2020, there were the fewest bankruptcy filings in 35 years. Still, more than one million people are expected to file in 2021 – nearly double the number that filed in 2020. This includes people who will file for Chapter 7 liquidation and Chapter 13 where they can formulate a payment plan to retain some of their property like a home or a motor vehicle. There has been a 13% increase in household debt in the past 12 years, much of it student debt and auto loans. Mortgages and credit card debt have been stable.
Bankruptcy is not the negative step many believe it to be
People are often reluctant to file for bankruptcy because of negative perceptions associated with it. They believe they will lose all their property and never again be able to get credit. These are mistaken beliefs. Bankruptcy can clear unsecured debt through Chapter 7 or formulate a workable payment plan through Chapter 13.
Understanding the process, what properties can be retained, how much it costs and the impact on the credit score are fundamental parts of deciding to file for bankruptcy. For many, this is an effective strategy to get on stronger financial footing. When considering the benefits and drawbacks of bankruptcy, professional advice is key. A firm with experience in bankruptcy cases may be able to help.