Early in 2020, many experts predicted a surge in bankruptcy filings due to the economic and personal disruptions caused by the COVID-19 pandemic. 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 was predicted?
Not at all. It is not a question of economic distress but timing.
What put off a lot of bankruptcy filings in 2020?
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 towards far more bankruptcy filings this year.
Every bankruptcy case deserves close legal attention
If this happens, bankruptcy lawyers in Hernando County and all around the State of Florida will be busy this year. If you are shopping for a bankruptcy attorney, make sure you choose one who has several years of experience and will give you and your case their full attention.