The American economy remains troubled at the beginning of 2021. Millions are unemployed, and it is not clear when they will be allowed to return to work. Without a regular income, except possibly unemployment insurance, their credit card debt may be spiraling out of control. It sounds like filings for Chapter 7 and Chapter 13 bankruptcy would be higher in New Hampshire than they have been in years.
But that actually is not what happened. Nationwide, personal bankruptcy filings actually went down during the recession of 2020.
Why aren’t people filing for bankruptcy protection?
It is not so much that the economy has not put people in need of bankruptcy. Much of the trend is due to the government’s reaction to the crisis.
Laws passed by Congress added hundreds of dollars to weekly unemployment benefits and gave most taxpayers up to $1800 per individual in stimulus payments. It also imposed moratoriums on evictions of tenants and foreclosures on homeowners. Though many of these protections ended in the autumn, they almost certainly kept millions of households from filing for bankruptcy, at least for a while.
Meanwhile, though the recession has impacted millions of jobs, it has most directly impacted a relatively narrow segment of the economy — specifically, the service, entertainment and hospitality industries. Many workers have been fortunate enough to have jobs they can do from home, so their economic situation has not become precarious. Unfortunately, this means the brunt of the recession’s effects has fallen on lower-paid workers in the service industry.
Whatever you are going through, bankruptcy may be able to help
Depending on if temporary protections against eviction and foreclosure are restored, along with unemployment benefits and other measures, the bankruptcy rate could stay lower than it would otherwise be. But things like medical debt, credit card debt and job loss will always be there to cause people in New Hampshire to consider Chapter 7 or Chapter 13 bankruptcy. People struggling with debts they cannot afford should consider talking with a bankruptcy law attorney to find out their best options.