Thanks in part to unemployment benefits efforts and stimulus payments, bankruptcy filings across the nation were down in 2020 compared to 2019.

They decreased nearly 30% from 2019 to 2020. The decrease in filings surprised many people because bankruptcies generally increase as the unemployment rate increases. Instead, bankruptcy rates for 2020 were the lowest we have seen since 1985.

However, those who have avoided bankruptcy for some time may end up turning to bankruptcy as 2021 moves forward. By some prediction, the roughly 560,000 filings we saw in 2020 could soar to over one million filings in 2021, which would keep Atlanta bankruptcy attorneys busy in 2021 and into 2022. Small businesses and individuals are predicted to be the most affected by this potential increase.

Bankruptcies in Georgia: Downward Trends, But Still Above Averagebankruptcy law in atlanta

According to statistics published by the American Bankruptcy Institute, Georgia saw a sharp decline in bankruptcy filings from 2019 to 2020—from 43,663 total filings to 27,953 total filings.

While this decrease is certainly an improvement, statistics from April 2021 show that Georgia is still ranked number 8 in bankruptcy filings per capita (based on census information from 2009). In prior years, Georgia has fallen in the top three states for bankruptcies (behind Alabama and Tennessee). In addition, Georgia has been 67% above average compared to the rest of the United States for bankruptcy filings from 2000 to 2020.

What Debts Lead to Bankruptcies in Georgia?

The reasons that people decide to file bankruptcy vary quite a bit by the individual. Everyone’s financial situation is different, so there is never a single reason that leads to the decision to file for bankruptcy protection. Some of the most common debts addressed in bankruptcy include the following examples.

  • Medical debt.

Medical expenses are the number one reason that people file bankruptcy. Statistics indicate that nearly two-thirds of all bankruptcies are due to medical expenses. These individuals often do not have health insurance, or health insurance will not cover high medical costs.

In many situations, individuals who have significant medical bills are not only dealing with health insurance problems, but they are also unable to continue working to pay these bills. Instead, many end up mortgaging their homes to pay medical bills. This type of financial action is not a good idea, however. Adding debt to your home to pay an unsecured debt like medical bills, credit cards, or personal loans is generally not a good option.

  • Unexpected expenses.

Loss of property due to theft, natural disaster, or another significant event can result in huge expenses that many people are simply not prepared to address. In some cases, individuals and families assume that they have insurance coverage to deal with these losses. But, their coverage actually does not extend to a specific event, such as a fire or flood.

These individuals not only have to deal with the loss or significant damage to their home, but they also have to address losing virtually all or the majority of their possessions.

  • Divorce and separation-related expenses.

When families break apart, they have to address the significant financial strain of not only separating their households but also paying all of the legal fees and costs associated with that break.

Making the switch from a dual-income household to having just one income source can devastate individuals and families. Suddenly having to pay child support, alimony, or large property settlements can lead to serious financial issues.

Filing Bankruptcy in Georgia

Unfortunately, some people still assume that most people file for bankruptcy because they are poor money managers. However, in the vast majority of cases, that assumption is simply untrue. Instead, unexpected, significant life changes are the real reason that bankruptcies occur.

While there has been a shift in thinking about the stigma around bankruptcy, it is still considered a “last resort” for many individuals. However, if you wait until you have no other option other than to file bankruptcy, you are doing yourself a disservice. By that time, you may have made the situation significantly worse than it would be if you had filed sooner.

Bankruptcy is a piece of the social safety net in the United States. Businesses are not afraid to take advantage of these benefits—and you should not be afraid, either. Talk to our Atlanta bankruptcy attorneys to learn more about the services we have to offer to those interested in filing for bankruptcy protection. Schedule your FREE Consultation