According to statistics from the Administrative Offices of the U.S. Courts, the total number of bankruptcy filings increased by 13 percent in the 12 months ending on September 30, 2023. Business bankruptcies during this time increased by approximately 30 percent.
Annual bankruptcy filings were 433,650 as of September 30, 2023, as compared to the 383,810 in September 30, 2022.
Factors contributing to the uptick in filings include rising interest rates and inflation.
The cost of healthcare has become a growing problem for many. One that has pushed patients to the brink of financial crisis. According to the Centers for Medicare and Medicaid Services, spending on healthcare in the U.S. has reached a record $4.1 trillion. The good news is bankruptcy can be used as an effective tool to eliminate medical bills, giving the consumer a fresh financial start.
According to figures from the 2021 U.S. Census, approximately one in every five households, or roughly 19 percent of all households, were not able to pay for medical care when it was needed. Many of these bills go unpaid and result in collections actions against the consumer. In fact, according to the Consumer Financial Protection Bureau (CFPB), in 2022, whenever debt collectors contacted consumers, medical debt was the main reason for this communication.
At the start of a bankruptcy case, the filer is asked to fill out certain documents, including disclosures regarding the person’s financial affairs. This disclosure includes the person’s income, expenses, assets, debts, and any property transfers.
The filer will also need to provide supporting documentation, and the documents required are essentially the same for both Chapter 7 and Chapter 13 cases, with slightly different variations. It is often helpful to check with the bankruptcy trustee to ensure that all required documentation is submitted. Some trustees require more proof than others, and many times, this evidence will also be determined by the facts of the individual’s case.
Bankruptcy filings have fallen to levels not seen since the mid-1980’s. The low number of filings are credited to the government aid and stimulus checks issued since the COVID-19 pandemic.
According to statistics from the Administrative Office of the U.S. Courts, 462,309 individuals and companies filed for bankruptcy in the fiscal year ending June 30, 2021, which is a 32 percent decrease from the previous year. The office also noted that this figure was the lowest one reported for a 12-month period since 1985.
Personal bankruptcy filings decreased 33 percent to approximately 444,000 over the course of a year. Business filings similarly declined, although by a lower percentage. Business bankruptcy cases dropped by 17 percent to approximately 22,500 filings.
Personal bankruptcy filings are down, leaving many financial analysts questioning whether the drop in filings can be attributed to financial relief offered from governmental pandemic relief programs or to other economic factors. This stimulus relief offered consumers a much-needed financial boost, but the question remains how long this boost will hold off future bankruptcy filings.
Personal bankruptcy filings reported in the country for the month of November hit a low not seen in 14 years. Financial analysts believe the drop in personal bankruptcy filings can be attributed to the current national and statewide moratoriums on evictions and foreclosures, as well as the availability of governmental stimulus aid related to the coronavirus (COVID-19) pandemic.
According to figures from the legal services provider, Epiq Systems, Inc., the total number of personal bankruptcy filings in the month of November amounted to 34,440 filings. This is the lowest monthly total reported since January 2006.
The coronavirus (COVID-19) pandemic has caused countless Americans to lose their jobs. More than 30 million Americans have filed for unemployment in the wake of the outbreak. Paying for basic expenses can be difficult enough but paying down debt while unemployed can seem impossible.
However, with proper planning and by taking advantage of opportunities available during this time, it can make things a little easier. The first step is to evaluate all expenses coming out monthly and create a budget to see what payments can be made. Additionally, the Coronavirus Aid Relief and Economic Security Act (CARES) provides some relief, as well, that can make this process easier.
The coronavirus (COVID-19) crisis has hit the American economy hard, which is evident in the number of unemployment claims being filed. It has been reported that approximately 17 million American workers have filed for unemployment over the course of three weeks after many businesses have shuttered.
Research from three different Federal Reserve banks have shown that bankruptcies related to the economic downturn from the COVID-19 crisis could increase by 200,000 to reach a record 1 million filings. However, this increase is possible only if government stimulus programs do not offset this increase.
A number of women who currently or formerly sold clothing through LuLaRoe have seen income from their “small businesses” decline dramatically in recent months, forcing some of the women to file for bankruptcy.
The personal bankruptcy filings- from January 2016 to October 2017- came up during a search of court records because the women or couples filing said they were “doing business” as Lularoe or LuLa Roe.” At least 24 have been identified, but it is estimated the number is much higher.
Experts noticed on average that the families reported a “quick downward fall” in income from their business from around 2015 to when they filed. For example, one woman, a single mom in California reported she made $61,330 in 2016 from “operating a business,” which is presumed to be her LuLaRoe business since it is the only one she says she owns.
But from January to July 2017, she had only made $10,547.42 from her business, less than half she had made midway through the year before. She reported her average net income in 2017 from her business was $184.39 a month.
She was spending just as much in some months, if not more, on “operating expenses” for her business as she was making, according to the filing. For example, in May 2017 she earned $1,796.12, but spent $2,666.13 to keep her business afloat.
She lists $28,991 in assets and $8,000 worth of “inventory.” Her $85,253.43 in debts include thousands of dollars on multiple credit cards and almost $1,000 owed to her Paypal merchant account. She filed for bankruptcy in July of 2017.
Some of the other women identified, listed unpaid unsecured business loans, which shows a “clearer tie to the LuLaRoe” business.”
The co-founders of LuLaRoe appeared on CBS This Morning to speak out against the recent allegations the company is facing about merchandise quality and refund policy complaints. A $1 billion lawsuit was filed on October 23 by two former consultants on behalf of all LuLaRoe consultants alleging the company is operating a pyramid scheme.
If you have any 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.
Related Resources:
https://www.buzzfeed.com/stephaniemcneal/lularoe-bankruptcy?utm_term=.bjkXAJ1kn#.vva5gXLwK
Boris Becker, the three-time Wimbledon champion has been declared bankrupt over a debt outstanding since October 2015. Becker’s lawyers pleaded with the bankruptcy court in London for “a last chance” to pay the longstanding debt. They argued there was sufficient evidence to show that Becker would be able to pay the debt soon through a refinancing arrangement, involving remortgaging a property in Majorca.
However, the judge in the case denied it, saying:
“He should have thought about that a long time ago. It is not often the case that a professional person has a judgment [debt] outstanding against them since October 2015. This is a historic debt.”
To add to his financial woes, his blue Maserati- on loan from a sponsorship deal- was taken away from him after he failed to pay the fines he received from numerous parking tickets.
Becker, who is currently working as a television commentator during the Wimbledon championships for the BBC and other outlets, has denied the bankruptcy claims, telling the German press he can meet all of his financial obligations.
Last week he presented the state of his finances to a London bankruptcy administrator in a private meeting, where he reportedly was given a living allowance and ordered to register any income.
Becker, who won six grand slams in the 80’s and 90’s, including three Wimbledon, two Australian Open and one US Open titles has been consistently creating headlines off the tennis court. Co-Author of Becker’s 2013 biography Life Is Not a Game, said his excessive lifestyle had been the one thread of continuity in his life.
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If you 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, P.A. 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 website at www.miamibankruptcy.com.
