Over the past year or two, we have seen the news reports on the expected tsunami of bankruptcy filings that we will experience soon. Indeed, economists across the country and world thought that the economic turmoil over this time would cause a bankruptcy surge, the so called, bankruptcy tsunami. However, we are now seeing that the numbers simply do not show this. In fact, bankruptcy filings have plunged to new lows.
The bankruptcy plunge
In Indiana alone, from March 31, 2020, to March 31, 2021, bankruptcy filings dropped by nearly 30 percent, but nationally, that number was nearly 40 percent. This is a startling drop because unemployment surged. For example, in our state, it peaked at 17 percent during this one-year period. Economists and other experts are baffled by this disconnect because a surge in unemployment has always been a strong indicator of a surge in bankruptcies.
While the experts may be baffled, they do have some speculations. For example, they point to the fact that U.S. consumption during that period dramatically dropped as we were no longer dining out, traveling or spending on other, so called, discretionary spending. They also point to the historic flexibility debt collectors are giving debtors and the eviction moratorium by the U.S. Centers for Disease Control and Prevention. This is in addition to the multiple stimulus payments and additional unemployment benefits.
What if it is time for bankruptcy?
While we have not seen the reported bankruptcy tsunami, this does not mean that people are not considering bankruptcy, especially, Chapter 7 Bankruptcy. For Indianapolis, Indiana, residents, this means contacting an attorney. An attorney can walk residents through the process and get them to their fresh financial start.