During the height of the COVID-19 pandemic, many companies were offering financial relief to their customers. Banks and other lenders suspended mortgage payments and late fees, credit card companies allowed customers to defer their bills and even insurance companies offered reduced premiums.

However, all of these forms of relief have an expiration date. When financial relief measures expire, it is likely that a spike in personal bankruptcies will follow. In fact, according to American Banker, the upcoming increase in personal bankruptcies is all but inevitable.

What Is Bankruptcy?

Bankruptcy is a legal process specifically designed to provide protection for people or businesses who are unable to pay their debts. The goal of bankruptcy is to pay as much of your outstanding debt as possible and eliminate the remainder so you can begin rebuilding finances. Consumers typically file one of two different types of bankruptcy: Chapter 7 or Chapter 13. Chapter 7 bankruptcy involves selling off your non-exempt assets to cover some of your debt and then discharging the remainder. Chapter 13 bankruptcy, on the other hand, allows you to keep your assets while paying as much of your outstanding debt as possible based on a payment plan approved by the court. The type of bankruptcy that should be filed depends on the individual’s unique financial situation.

Understanding the Spike

The coronavirus pandemic has caused financial devastation that is expected to continue. Because of shelter-in-place orders, many people were unable to go to work and bring in the same income they once did. Likewise, sole proprietors also lost income when shelter-in-place orders threatened their business activities. Financial relief measures and the stimulus checks released by the federal government acted as a bandage for many of these people, keeping them afloat temporarily. However, when these relief measures expire, people who were barely surviving are going to feel the impact. Unemployment numbers are still high, and many families are still struggling to make ends meet.

Those individuals and families that were already struggling financially prior to taking advantage of relief measures will quickly fall behind once these measures expire, especially if they have not been able to recover their ability to earn income. For many families, this will ultimately lead to bankruptcy.

Contact Our Firm

if you are struggling to pay your bills and you are thinking about filing bankruptcy, it is important to seek guidance from a qualified legal representative. The experienced bankruptcy lawyers at Clark & Washington will review your financial situation carefully to help you determine if bankruptcy is the best course of action for you. If you decide to proceed with filing bankruptcy, we will also help you choose and execute the most appropriate bankruptcy plan so you can eliminate your debts and get back on your feet. If you are looking for a bankruptcy attorney near Atlanta, please contact our office today to schedule a consultation with a member of our team. You can now file your bankruptcy completely over the phone without ever leaving the safety of your home.