Even though unemployment filings have skyrocketed, and countless businesses have been struggling during the coronavirus pandemic, bankruptcy courts have not been flooded with new cases- yet.
When compared to bankruptcy filings in April 2019, there were 47 percent fewer consumer bankruptcy filings in April 2020, according to the American Bankruptcy Institute (ABI).
ABI reports that 2,278 commercial bankruptcy filings were made in April 2020, which is a 35 percent drop from the previous year. On the flip side of this, more than 30 million consumers filed for unemployment by the end of April. What is causing this disparity?
Several different factors, including the $2.2 trillion CARES Act, the stimulus bill that was passed and made law in March. The CARES Act authorized the government to issue $1,200 to individuals, $2,400 to married couples, and $500 per child. The CARES act also allowed student loan borrowers to seek reprieve from defaulted student loan obligations, thus easing up the financial burden many were carrying. This temporary financial assistance has helped many families for the time being. However, once that money is gone, it remains to be seen whether the trend will change, and more people will file for bankruptcy.
Other financial analysts believe that people are currently in a state of shock as this pandemic continues to unfold. Once the dust settles, they may seek the protection of bankruptcy to help them financially. The cost of filing for bankruptcy could be another reason why consumers have held off on filing.
While some states have begun to reopen, others have not. Many workers have been furloughed by their employers due to the shutdown, so it is highly possible that these individuals may feel compelled to resort to bankruptcy for relief.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.