‘2022 could be the year of financial reckoning’: Bankruptcies fell dramatically in 2021, but these challenges await

- Advertisement -


The pandemic continues to grind, and the number of bankruptcies continues to dwindle – at least for now.

- Advertisement -

Consumers that were in over their heads in debt and distressed businesses submitted 434,540 bankruptcy filings through September, according to a report good On the federal court system from Supreme Court Chief Justice John Roberts.

- Advertisement -

This is a drop of nearly 30% from 612,561 bankruptcy cases filed at the same point in 2020, the report said. And even this number was less than the 776,674 bankruptcy cases registered in 2019.

Even before the pandemic, bankruptcy cases in recent years were already far from the high numbers during the Great Recession. There were about 1.6 million cases in the first nine months of 2010.

- Advertisement -

The report noted that most bankruptcy cases are filed by consumers. Cases can give a person a fresh financial start after entering into a court-supervised plan to pay creditors through repayment plans or liquidated assets.

The report said “increased government benefits” throughout the year — such as a third round of $1,400 stimulus checks, supplemental jobless benefits and monthly child tax credit payments — were one reason for the decline.

So were the eviction moratoriums, including the now-lapsed federal moratorium on evictions. The year-end report also pointed to “state lockdown orders that led to a reduction in personal expenditure.”

,‘There are many forces that are pushing people not to file bankruptcy now and certainly throughout 2021.’,


– Professor Pamela Fuhe, Benjamin N. of Yeshiva University. A Consumer Bankruptcy Specialist teaching at Cardozo School of Law

As of November, there were 369,690 cumulative bankruptcy filings in 50 states and Washington DC, according to separate American Bankruptcy Institute data. Till the same time last year, 523,917 cases were registered.

Are these numbers indicative of benefits from incentive checks and monthly child tax credit payments? Or a sign of a rebounding economy during the job-seeking market? If so, should this raise concerns for 2022 as more government aid runs out?

Yeshiva University’s Benjamin N. “There are a number of forces that are pushing people not to file bankruptcy now and certainly throughout 2021,” said Professor Pamela Fuhe, a consumer bankruptcy specialist at the Cardozo School of Law.

Before bankruptcy, Fuhe said it could take people about two years Of financial struggle that ends with a crisis like an eviction notice. But it is not clear when the hour of that struggle might happen in the current context, she said.

Without Congressional action, the last increased child tax credit came and went on December 15. The pause on federal student loan payments lasts until May 1. Meanwhile, inflation continues to heat up and is hurting US spending power.

Excluding mortgages, home loan balances for obligations such as auto loans, credit cards and student loans rose by $61 billion to $4.25 trillion in the third quarter. Federal Reserve Bank of New York.

She just doesn’t know to what extent this translates into bankruptcy cases. “People want to pay their bills and be financially secure, and they put off filing bankruptcy in the hope that they’ll be financially secure,” she said.

“2022 could be the year of financial calculations where people start overpaying on their debt,” Fuhe said.

,

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox