South Carolina bankruptcy attorneys explain 2022 filing forecast
It sounds like good news: Amid a pandemic and economic lockdown, U.S. bankruptcy filings plummeted in 2021. Bankruptcy filings dropped off by 30 percent in fiscal year 2021 to just 434,540, from 612,561 the previous period, according to a report out of the Supreme Court.
But analysts caution this may not be a sign of economic recovery. The financial hits many people and businesses took last year are expected to start taking their toll this year. A wave of new bankruptcy filings may be building as fall out from the nation’s COVID-19 response unfolds.
Finding a bankruptcy attorney and filing for financial protection is often a good way for people to eliminate debt, stop foreclosure, and get a fresh start following hardships.
Pandemic benefits and bankruptcy
Bankruptcy filings decreased, the report from the federal court system says, for a variety of reasons, including three rounds of stimulus checks, supplemental jobless benefits, and monthly child tax credit payments.
The situation was further helped by eviction moratoriums, delayed student loan payments, and economic lockdowns that reduced people’s personal spending. For the most part, those measures are over now or ending soon — student loan collections are slated to start back up in May.
Analysts say we may start to see the effects of ending these programs sometime this year. While everyone’s situation is unique, people tend to follow a similar bankruptcy timeline. There are signs this clock is already ticking down.
Two years to bankruptcy
According to some analysts, it usually takes about two years of financial struggle before a person files for bankruptcy. During this time, people typically take action to pay their debts. These efforts, however, are often dashed by an unforeseen hardship, like a medical emergency, until declaring bankruptcy is the only remaining option.
It’s unclear whether government benefits helped people avoid bankruptcy or merely delayed it. There are researchers who see signs that the drop in filings is temporary.
Many factors are considered when forecasting bankruptcy filings, including household debt and inflation. Both of these indicators are trending upwards. Not counting mortgages, household debt rose by $61 billion in the third quarter. Meanwhile, inflation jumped by 7.5 percent in the past year — the largest jump recorded in 40 years.
2021 South Carolina bankruptcies
In South Carolina, there were 3,376 bankruptcy filings in calendar year 2021. Only 86 of the filings were for businesses; the rest were personal. There were about 160 more Chapter 13 filings than Chapter 7.
Some communities had more filings than others.
- Richland County submitted 356 bankruptcy filings, more than any other South Carolina county. It also had the most personal bankruptcies, at 348.
- Charleston, Greenville, and Richland Counties are tied for the most bankruptcies filed by businesses with 8 applications each.
- Horry County had the second-most personal bankruptcy filings in the state with 286 such applications in 2021.
Applying for bankruptcy in South Carolina
Every year, millions of good, hardworking people have to face the fact that they can’t make ends meet. Most are unsure how to get themselves out of the situation. Bankruptcy is a tool available to help people regain control of their finances, but, like most tools, it works best when you know how to use it.
Benjamin R. Matthews and Associates, LLC is a trusted South Carolina bankruptcy law firm. When things look bleak, our attorneys go to work for you. We investigate a range of legal and financial options to help you make the best choice for yourself and your family.
If you are considering bankruptcy, contact us for a free case consultation. A member of our team will listen to the details of your financial situation and explain how the law applies to you. At no cost to you, we can discuss your legal options.
Benjamin R. Matthews and Associates has offices in Columbia and Rock Hill and proudly serves all of South Carolina. A member of our legal team is available to hear from you 24/7. Contact us now to schedule your free case evaluation.