Since the beginning of 2020, the United States has gone through a crisis unknown since the 1918 influenza pandemic spread throughout thousands of communities. The coronavirus not only created a huge public health issue, but it also resulted in many social and economic problems. The economic impact of the COVID-19 pandemic happened for many reasons. The state-mandated shutdowns and overall pause of nonessential operations was a large part of that impact, but many other trickle-down effects added to the nuanced conditions of today’s current economic situation. One way to look at the ways our country has coped with the unprecedented economic changes is to examine the patterns of unemployment and bankruptcy from 2019 to 2020. If you are among the many still struggling with debt and financial instability from the past year or any time before that, Behm Law Group Ltd. can help you file a strong bankruptcy case for long-term debt relief in Worthington, MN, and the surrounding areas.
Bankruptcy is a court-enforced and court-administered process that legally provides for the discharge or the reorganization of your debts. A bankruptcy case works to provide a level of fairness to all parties involved by significantly leveling the economic playing field for bankruptcy filers. Bankruptcy allows bankruptcy filers to not only discharge their creditors’ claims but also significantly modify the terms of payment such as reducing interest rates, reducing amounts of debt, etc. A bankruptcy case also provides fairness to creditors because creditors are still paid but are simply paid under adjusted terms.
While some impacts of COVID-19 on our economy were predictable, others were more unexpected.
Two of the most important reasons why bankruptcies decreased during the COVID-19 pandemic were the federal stimulus checks and increases in federal unemployment benefits. In December 2019, bankruptcy cases were hitting a low point of around 53,000 nationally (both business and personal). Just before the real effects of COVID-19 in the United States hit home, March 2020 bankruptcies spiked by about 10,000 to around 62,800. This kind of increase typically occurs in the beginning of a year due to many aspects, but often is most attributable to the after-effects of holiday spending. By the time the pandemic was causing national shutdowns, the U.S. government had begun to issue stimulus checks, and debt, rent, utility, and other providers/creditors were offering more lenient repayment terms. At that time (April–May 2020) bankruptcies dropped dramatically to around 38,500.
From February 2019 to February 2020, unemployment rates hovered at around 5.7 million U.S. citizens. From March to April of 2020, that number jumped up to over 23 million. The increase was almost entirely due to stay-at-home orders, but many people also lost their jobs because their employer couldn’t sustain a temporary shutdown and had to close its business permanently. After the country began to open up again in July 2020, unemployment rates decreased rapidly to around 16.3 million.
This general overview of bankruptcy and unemployment throughout the pandemic is basic, but it provides some indication of what can happen during such a difficult financial time. If you are still facing difficulties with your finances, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing email@example.com for more information about bankruptcy and debt relief in Worthington, MN.