The COVID-19 pandemic has cost the United States trillions of dollars, including the stimulus programs designed to keep the economy afloat. Unfortunately, the pandemic doesn't seem to be going anywhere anytime soon and will continue to wreak economic havoc on residents and businesses.
The unemployment rate in the U.S. spiked to more than 14 percent in March and April, when COVID-19 was first declared a pandemic. We have since seen an decline in the unemployment rate, with the latest being less than 7 percent in October. The unemployment rate could rise again this coming winter as the U.S. braces for the second wave of the coronavirus.
Millions of Americans struggle to make ends meet as CARES Act ends
Millions of Americans who were out of work were able to receive $600 per week in in addition to unemployment benefits through the CARES Act. The program ended in July, as Congress failed to extend it or devise another stimulus program.
According to a survey conducted by the Harvard Kennedy School of Business, roughly 10 percent of unemployed workers said that they weren't able to pay their bills on time during the month of August. By October, that percentage doubled to 20 percent.
This financial crisis could lead to many unemployed Americans relying on credit cards and personal loans in order to make ends meet. Many Americans already struggled with debt prior to the pandemic. According to the Federal Reserve, household debt has increased by 13 percent since the 2008 financial crisis.
Experts predict a rise in personal bankruptcy
Ed Flynn, an editor at the American Bankruptcy Institute Journal, predicts that there will be an "uptick" in bankruptcy filings due to the end of the CARES Act. Flynn also claims that student loans will likely drive an increase in personal bankruptcies. (Most student debt cannot itself be discharged through bankruptcy, but people who have high student loan payments may have to take out personal loans or spend money on credit cards to make ends meet, and those debts can be discharged through bankruptcy.)
In addition, many families will likely file bankruptcy when they are about to foreclose on their homes. When a homeowner files for bankruptcy, the court issues an automatic stay that requires creditors to stop collection activities and, in particular, forces mortgage holders to cease foreclosure activities. In most cases, a Chapter 7 bankruptcy will not ultimately stop the home from being sold, but it can buy more time to negotiate with the mortgage holder and work out a plan to avoid foreclosure. Typically, a Chapter 13 bankruptcy is a more powerful option to avoid foreclosure because it reorganizes debt and creates a long-term repayment plan; as long as the homeowner makes timely payments under the plan, the home is protected from foreclosure.
Why should I hire an attorney for a personal bankruptcy?
The decision to file for a personal bankruptcy is never an easy one. Deciding which type of bankruptcy is best for you can be even more confusing. If you're planning on filing for bankruptcy, you may not be fully aware of how the process works and what options are available to you.
An experienced South Carolina bankruptcy lawyer at Benjamin R. Matthews and Associates, LLC can help you determine which pieces of debt qualify for discharge and which legal options will work best for your situation. In recognition of the unique hardships so many South Carolina families are facing due to the pandemic, we are currently offering "No Money Down" Chapter 7 bankruptcy filings to those who qualify.
Our law offices are conveniently located in Columbia, Florence, and Rock Hill, South Carolina. Contact us online to set up your free initial consultation.