Bankruptcy Lawyers
South Carolina


New Bankruptcies Hit Yearly High

Petition to file for bankruptcy papers next to a judge's gavel

The pandemic may be easing, but the crisis is still taking a severe financial toll on individuals and their families. Bankruptcies, for instance, have skyrocketed.

Our legal team sorts out the numbers and what they mean. Here's what you should know.

The bankruptcy numbers

March saw the highest monthly increase in new bankruptcy filings since the beginning of the COVID-19 pandemic a year earlier. The report from Equip found 43,425 bankruptcies were recorded across all chapters, led by consumer filings (41,150, a 41% monthly increase).

Broken down further, the numbers reveal the largest increases:

  • 30,802 Chapter 7 cases, also known as liquidation. In this scenario, a debtor’s assets are sold off to pay creditors.
  • 10,265 Chapter 13 cases, also known as reorganization. In this case, people propose a repayment plan of installments to their creditors over three to five years.

In both instances, desperate consumers are seeking relief from the impact of the pandemic on their personal finances. Experts believe the sudden increases are the result of a backlog of cases and expect new filings will “grow substantially in the second half of 2021.”

Any predictions about the immediate future of bankruptcy filings, of course, are subject to many volatile factors. Chief among them are the impacts of the ongoing pandemic, especially with much of the world still struggling, and additional government stimulus programs that aid consumers.

A lot – almost too much – to consider

As with any statistics, it’s easy to forget that there are faces behind the dire bankruptcy numbers. In March, tens of thousands of people were using bankruptcy in an effort to regain their financial footing. None of them came by the decision easily. If economists are correct, many more families will be facing the same decisions in the near future. Before proceeding, they should be aware of some of the major consequences, both good and bad, of filing for bankruptcy.

On the plus side, filing for bankruptcy means the end of debt collection activities. You still owe money, but you will not receive calls or letters, have your wages garnished, etc. Bankruptcy can eliminate some debts, including bills for credit cards, medical expenses, utilities, and personal loans. You may be allowed to exempt certain property from bankruptcy, such as a home, motor vehicle or wedding ring.

On the minus side, bankruptcy means many credit card companies will automatically cancel your cards. Some potential landlords may hold bankruptcy against you. But, though your credit score will suffer for a time, most people are able to qualify for loans and mortgages after just two years.

The bottom line: A bankruptcy filing is going to have a major impact on your life for many years.

Don’t make the decision alone

If you make smart, informed decisions, bankruptcy can help you turn your life around. If you make unwise decisions, bankruptcy can make your life worse. Mistakes are far too easy to make. Filing too early or at the wrong time can present problems. Filing for the wrong type of bankruptcy – Chapter 7 or Chapter 13 – can also backfire.

The South Carolina bankruptcy attorneys at Benjamin R. Matthews and Associates, LLC in Columbia and Rock Hill have handled thousands of cases since 1985. We know each bankruptcy proceeding is different. That's why we will take the time to customize the best bankruptcy plan for you and your family, then guide you each step of the way back to financial independence.

Discover what an experienced bankruptcy lawyer can do for you and contact us today for a free consultation.

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2010 Gadsden Street
Columbia, SC 29201

Phone (803) 799-1700
Fax (803) 728-6718

331 E. Main St, Suite 257
Rock Hill, SC 29730

Phone (803) 909-9377
Fax (803) 728-6718