After leveling off after the disruptive years of 2020 and 2021, bankruptcy rates show signs of rising again. Several economic challenges point to possible trouble ahead for many consumers and commercial interests.
A stalled economy often leads to more people seeking protection under Chapter 7 and Chapter 13 bankruptcy laws.
An uptick in filings
Information compiled by Reuters shows that more individuals and more businesses looked to apply for bankruptcy protection in recent months. Though these levels remain below the rates of the previous year, they point to a worrisome trend. A one-month jump in filings represented an increase of 33.5 percent from the previous month.
This comes at a time when economic conditions remain relatively mixed. The factors of high inflation, rising interest rates, labor issues and supply chain bottlenecks put added pressure on many consumers and companies. Also, the expiration of several debt relief programs could impact many individuals and small businesses.
A look at upcoming factors
According to WFYI, an Indianapolis affiliate of PBS, some lawyers expected to see a rise in bankruptcies in 2022. The primary reason for this could come in the form of housing instability as many people face pressures on making mortgage or rent payments.
A broader perspective shows that a single event such as high medical bills, divorce, job loss or the death of a family member could trigger financial difficulties. Many currents in today’s society point to a less stable future for those struggling to find affordable housing and pay bills. This could lead to a continuing rise in personal bankruptcy rates.