Early on in the economic and personal disruptions that happened in 2020, many experts predicted a surge in bankruptcy filings. With unemployment at historically high levels for much of the year, it made sense to expect that millions of more households than usual would turn to Chapter 7 or Chapter 13 bankruptcy protection.
But the expected jump in personal bankruptcy filings never happened. For example, here in Florida, statistics show that filings dropped 20 percent compared to 2019. So what happened? Did layoffs and unemployment not affect the Sunshine State as much as we thought?
Not at all. It is not a question of economic distress but timing.
What put off a lot of bankruptcy filings in 2020?
For one thing, lockdowns at federal courthouses delayed many bankruptcy filings. For months, bankruptcy courts were virtually shut down, and cases were at a standstill. Meanwhile, stimulus checks, extra unemployment benefits, and government-imposed moratoriums on foreclosures and evictions provided some temporary relief. Many people facing unmanageable debt were able to stay afloat for a little while longer than they would have without these forms of assistance.
Finally, bankruptcy filings tend to lag behind bad economic conditions. Observers now believe that the extent of Americans’ need for bankruptcy protection will not be known until the coming months. As unemployment and the slow economic recovery continue to affect the country in 2021, the trend should move to far more bankruptcy filings this year.
Every bankruptcy case deserves close legal attention
If this happens, bankruptcy lawyers in Spring Hill and around Hernando County will be busy this year. If you are shopping for a bankruptcy attorney, make sure you choose one who will give you and your case their full attention.