Economic indicators point to a strong and thriving economy; U.S. gross domestic product has improved beyond market expectations, there have been jobs added for a record number of months, and an increase in wage growth. The nation’s unemployment rate historically low at about 3.8%, and Wisconsin’s unemployment is even lower at 2.4% or below. https://www.bls.gov/web/laus/mstrtcr1.gif
How Bankruptcy is Impacted
One may wonder how bankruptcy filings may be impacted by the current economy, or vice-versa. During a recession, there are more bankruptcy cases, but does the thriving economy equate to less consumer debt? Is there still a need for personal bankruptcy? This article addresses these questions and provides insight into the current day as it relates to debt relief and bankruptcy.
Influence of Economy on Bankruptcy
Influence Economy has on Bankruptcy
In a strong economy, does the need for bankruptcy disappear? On the contrary; the need for bankruptcy protection, regardless of whether the economy is weak or strong. There are logical reasons for this:
• A consumer’s higher debt than income ratio continues to align with the need to file bankruptcy; as more people enter the workforce, they may take on more credit that they can pay back.
• Bankruptcy demographics, especially age, are a growing factor regardless if one has insurance or not, and more due to living on a fixed income.
• People desire to protect their assets & responsibly take care of their family finances in both good & struggling economic situations.
• Life events & accidents that take a toll financially are just as unexpected; bills can pile up, regardless of the economy. This includes the diagnoses & treatment of medical conditions.
Influence Bankruptcy Has on Economy
Unless it’s happening on a large scale, bankruptcy mostly has a positive impact on the economy. This is because the process of personal bankruptcy allows consumers to ultimately, get rid of debt. Depending upon which type of bankruptcy is filed; an attorney either facilitates low-payment plans with lenders through Ch.13 bankruptcy, or helps to discharge debts completely through Ch. 7 bankruptcy. When a person becomes debt-free, they are more likely to buy things including large assets such as homes, land, and vehicles. The combined purchase power of goods and services has a positive impact on the economy.
Bankruptcy Trends in Current Economy
During both weak and strong economic environments, bankruptcies continue to happen every day. Recent trends reveal that the number of older people who file bankruptcy is growing. Credit card companies are no longer allowed to target students so fewer of them are using credit. But the aging population of boomers presents a different scenario. Many seniors are living on a fixed income, and some rely on social security alone. The aging and elderly have major medical needs and medical costs such as insurance and prescription costs have been on the rise. A diagnosis like cancer can quickly lead to overwhelming medical debt; clearing out home equity, personal savings and retirement. Credit cards may be used to fill in the income gap for a period of time.
Bankruptcy filings at their current level will continue to stimulate the economy by eliminating consumer debt and encouraging the purchase of goods and services. It’s at first a harsh reality, but once a desperate financial situation presents itself; consumers find the availability & protection of bankruptcy a relief. Debt Advisors Law Offices has affordable bankruptcy options and your first consultation with an attorney is free. Even amidst a strong economy, consumers who need it the most will continue to benefit from filing bankruptcy.