We have all seen that economic indicators can quickly change from a strong and thriving economy to a struggling nation. During a recession, there are more bankruptcy cases. However, a thriving economy doesn’t always equate to less consumer debt.
Influence Economy has on Bankruptcy
In a solid economy, does the need for bankruptcy disappear? On the contrary; the need for bankruptcy protection remains, regardless of whether the economy is weak or strong. There are logical reasons for this observation:
• 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 and responsibly take care of their family. This is true for finances in both good & struggling economic situations.
• Life events & accidents that take a toll on folks financially are 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, the bankruptcy impact is mostly positive on the economy. This is because the process of personal bankruptcy allows consumers to 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. Credit cards may be used to fill in the income gap for a period of time. Seniors have traditionally lived on a fixed income, and some rely on social security. But medical costs for hospitalization, insurance and prescription are on the rise for everyone. A COVID hospitalization or diagnosis like cancer can quickly lead to overwhelming medical debt; clearing out home equity, personal savings and retirement.
Bankruptcy Stimulates Economy
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.