Bracing for the inevitable wave of bankruptcy cases in 2020July 2, 2020
While the country shuts down in response to the Coronavirus pandemic, many individuals and businesses come face to face with financial uncertainty. With businesses shuttered, many have begun to fall into debt to stay afloat in order to save their business and livelihood. As many states have begun to reopen with restrictions on business operations and social distancing guidelines, many are faced with the reality that they will need help to recover from their debt. For many corporations and individuals alike, bankruptcy will be their best option to start the road to financial recovery.
Corporate bankruptcy filings are on the rise
In May alone, 722 companies filed for bankruptcy protection, a 48% increase from the same time in 2019 putting the US on track to see more bankruptcies than we have seen since 2009. According to Bloomberg, the amount of debt classified as distressed debt (securities over companies that are experiencing operation and/or financial distress) rose 161% from February to April, bringing it to more than half a trillion dollars. With numbers like these, experts predict we could be on a path for one of the worst financial crisis since 2009.
Individuals filing for bankruptcy expected to increase
With so many businesses looking at reorganization, many employees are finding themselves out of work and with new financial struggles. While the extended unemployment benefits and stimulus assistance under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) have temporarily helped many individuals, the economic fallout from the pandemic is guaranteed to increase in Chapter 7 filings. Once individuals have exhausted their unemployment benefits and have fallen behind on mortgage and credit card payments, it is greatly anticipated to see a surge of individual bankruptcy filings, especially in states that have extended longer stay-at-home orders that have prevented many individuals from returning to work.
Does your firm handle bankruptcy cases?
With the anticipated influx of Chapter 7 filings over the next year, firms need to prepare to take on the volume of these new cases. Legal Brand Marketing offers exclusive bankruptcy leads. Many of these individuals seeking to file for bankruptcy are overwhelmed and scared and want to work with an attorney that can help guide them through the process. Contact the Legal Brand Marketing team to learn more about our exclusive bankruptcy referrals, or to see if your territory is available.