Between a pandemic that has shaken the globe and the most recent inflation spikes that the United States has recently seen, the economy appears to be in a constant state of chaos and affecting everyone’s lives.
The pandemic knocked many people off their feet, both financially and physically, as most people were suddenly unable to work due to shutdowns and work closures.
Now that most people have returned to a semi-regular rhythm of life, a steady spike of inflation continues to strain the wallets of everyday Americans.
With this perfect storm of financial trouble, you might be wondering if bankruptcies are on the rise in 2022. Follow along to learn whether recent inflation has caused an increase or decrease in bankruptcy filings in 2022.
Are Bankruptcy Filing Numbers High in 2022?
According to the United States Courts bankruptcy filings have been steadily decreasing1 in the last two years.
- For the year-long period ending March 31 2022, bankruptcy filings fell more than 16 percent.
- As of the year-long period ending March 31 2022, the total number of bankruptcy filings are at 395,373 compared to 473,349 in 2021.
- In total, that’s a 16.5 percent drop in bankruptcy filings in a year’s time.
Overall, it appears that bankruptcy filing numbers are the lowest that they have been in recent years.
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What Are the Numbers for Bankruptcy Filings During the Pandemic?
The economy can be tough to predict and bankruptcy numbers are no different. Here’s how the pandemic affected bankruptcies:
- The total number of bankruptcies that were filed in the year that the pandemic started, 2020, totaled 764,282.
- Just a year later into the global pandemic, the total filings of bankruptcies landed at 473,349.
- From the start of the pandemic to just a year later, the number of bankruptcy filings dropped by over 38 percent.
So, while you might think that bankruptcies would spike in times of global chaos and uncertainty, there was actually a significant drop in bankruptcy filings at the start of the pandemic and the following two years after.
Did Covid Cause a Rise in Bankruptcy Filings?
Surprisingly, based on the data, Covid did not directly cause a rise in bankruptcy filings. You might be thinking that during the first years of the pandemic most people could not work, pay their bills, or in some cases even leave their houses for groceries and other necessities. How could anyone possibly be financially stable without being able to go to their jobs and make money to pay their bills?
Three factors directly or indirectly reduced the numbers of bankruptcy filings in the first years of the pandemic.
- Moratoriums. Both federal and state governments provided several moratoriums for rent and other bills like student loan payments.
- Stimulus Money. Government assistance in the form of stimulus checks as well as unemployment funds for those not able to work, allowed for people who could not work or pay their bills to be able to survive financially without the need to file for bankruptcy.
- Lenders. During the start of the pandemic, some lenders were able to alter payment amounts or payment schedules. Additionally, lenders were able to alter the terms of repayments for individuals that were not able to pay their bills or loans in full or on time.
Do More People File for Bankruptcy During Times When Inflation Spikes?
Within the last few years of the pandemic it has become increasingly difficult to determine whether bankruptcy filings will increase, decrease, or remain relatively the same as inflation rises.
In general, times of high inflation place an extra financial strain on most everyone in some way or another. However, for those individuals who are less financially secure, and have become increasingly less financially secure during the pandemic, the rise of inflation could spell bad news for these individuals.
Considering filing for bankruptcy? We have helped thousands of Nevadans over two decades. Schedule a free consultation today.
Are Bankruptcies On the Rise in 2022?
While the number of bankruptcy filings fell for two years in a row at the start of the pandemic in 2020 and have remained low since, some economic data suggests that you might begin to see higher numbers of bankruptcy filings2 or individuals defaulting on loans toward the end of 2022.
It’s impossible to tell the future, however this current spike of inflation combined with the termination of multiple moratoriums and government financial assistance programs could signal trouble for many Americans toward the end of 2022.
Between the rising costs of groceries, used and new cars, and gas prices soaring up to 50 percent higher than the cost one year earlier, it’s safe to say that it has become increasingly difficult for families to go to and from work and provide themselves and their families with essentials during these spikes of inflation. While it’s not a definite yes, these signs point to a very possible rise in bankruptcy filings across the country.
Bankruptcy Lawyers Near Me
What is clear is that between the exhaustion of government-funded assistance and moratoriums throughout the United States, combined with increasing inflation, there is no better time for you to be prepared if financial strain finds its way to you. If you’re currently considering or struggling with filing for bankruptcy, consulting with Nevada Bankruptcy Lawyers is the best financial solution for taking the next steps. Contact us today.
1Bankruptcy Filings Continue Steady Drop. (17 May 2022) United States Courts. Retrieved 23 June 2022.
2Fink, S. (7 February 2022) Inflation Rates and the Corresponding Impact on Bankruptcy Filings. Weltman. Retrieved 23 June 2022.