Over that last decade or so, our economy has been challenging for consumers and business owners alike. It’s very likely that you know someone who is struggling financially, and that someone may even be you. Whether it’s unemployment, illness, foreclosure, or bankruptcy, very few of us have been left untouched by trials. Bankruptcy filings peaked in 2007, and then decreased significantly 2008-2011. Filings are still dropping, with a 10% decrease 2014-2015. The majority of cases filed are individuals and married couples filing Chapter 7 or 13, and there has actually been a slight increase (2%) of businesses that filed Chapter 11. Filings are currently at 2.63 per capita, which is the lowest they’ve been since 2006. In 2016, we’ve seen an increase in interest rates, so it remains to be seen how bankruptcy filings will be affected.
Depending on your source, it does appear that the overall economy and unemployment rates in the United States are improving. Many people are also striving to live more simply, focusing on people and experiences rather than money and “stuff.” This often comes as a result of past financial struggles and seeing what’s really important in life. Living within your means and spending less translates to less debt (in theory), which can really decrease stress.
The decrease in filings could also be a simple equation: most people who needed the relief of bankruptcy have already filed and are moving toward rebuilding their finances, so there are now fewer people who need to file. Consumers and creditors have also become more creative when it comes to tackling debt. People may be willing to make large sacrifices to avoid bankruptcy and its negative consequences and to preserve their credit, and lenders may be willing to negotiate payment plans and reductions of interest rates, in hopes of recouping some of the money they lent out. Some hospitals and medical companies have funding available for consumers who cannot pay their medical bills. Based on need, they may even be willing to completely forgive medical debts. Over the last few years, banks have been very slow to move forward with foreclosure on homes, sometimes even taking up to a year before the resident needs to move out. Some people have decided to stay in their homes while getting caught up on other bills in order to avoid bankruptcy, even if it means eventually losing their homes.
While it’s not a good idea to rush into bankruptcy without considering the many available alternatives, it’s also not wise to put off the inevitable. Living with the stress of debt can take a toll on your physical and emotional health, and I can offer you several solutions. Bankruptcy may be the best way to get a handle on your finances, and once you file, the automatic stay will stop irritating calls from creditors. Let’s make a plan to get you back on your feet.