If there is one thing that we can all agree on, it is that we are living through crazy, nearly apocalyptic financial times. However, a lot of that financial disaster has been staved off by federal and state benefits, along with moratoriums on foreclosures and evictions. However, as many of these benefits and moratoriums expire at the end of this month, experts expect a torrent of bankruptcy filings next month.
Bankruptcies are currently down
In normal times, periods of higher unemployment rates correspond with bankruptcy filings. As such, we would expect the bankruptcy numbers to be high right now with skyrocketing jobless numbers. In addition, normally, personal bankruptcies usually increase when businesses filings increase, and there have been a deluge of high-profile business bankruptcies this year. And, the Federal Reserve Bank of San Francisco found that Chapter 11 bankruptcy filings (business bankruptcies) are at their fastest pace since 2013. However, according to a study from Harvard Business School, Chapter 7 and Chapter 13 bankruptcies are actually significantly down since mid-March. This bankruptcy lull has also been noticed by industry insiders.
The end of this month confluence
The end of this month will see a confluence of bad events that may prove to blow up the current bankruptcy lull. First, rent and mortgage payments are normally due at the beginning or end of the month. Second, state and federal aid, like that from the CARES Act, is expiring or has already expired. Third, the foreclosure and eviction moratoriums expire at the end of the month. And, finally, and most concerning, we are going through another waive, which means more shutdowns and job losses. This all means that, for those currently treading financial water, they may begin to drown as eviction and foreclosure proceeding commence and debt continues to mount.
What does this mean for us?
For Houston, Texas, residents that are struggling that see bankruptcy on their horizon, call a bankruptcy attorney now. The courts are already behind because they largely shut down earlier in the year and are already dealing with a deluge of business filings. This means that when the accompanying deluge of personal filings begin, the bankruptcy courts will likely see gridlock. This means that those who filed early will be in a much better position to get their fresh financial start.