While vaccination distribution is greatly improving worldwide conditions in the face of the coronavirus pandemic, there are still residual effects of a global economic shutdown negatively impacting the finances of many people and businesses so far in 2021. The three stimulus packages in the United States have done their part in protecting many households and businesses from severe financial instability, but that financial support has limitations, and it is not something that people and businesses can rely on indefinitely. The positive economic effects of the three Covid-19 stimulus packages have mostly been fully realized. Today, many businesses and individuals need to turn to bankruptcy to resolve their debts that were accumulated in 2020. While many different households and businesses can use bankruptcy for debt relief, the pandemic and subsequent shutdowns have greatly affected several industries much more than others. If you are considering filing for bankruptcy as a small business or as an individual consumer, Behm Law Group Ltd. can help. Our attorneys will guide and protect you throughout the process of filing for bankruptcy in Luverne, MN, and the surrounding areas.
We primarily work with individuals and small businesses filing for Chapter 7 liquidation or Chapter 13 reorganization bankruptcy. So far, the federal government’s stimulus support and many other aspects of the 2020 CARES Act have protected low-income households from bankruptcy. Federal loans, federal and state grants and other Covid-19 related financing alternatives offered by various banks and credit unions have helped many small businesses stay afloat during the shutdowns. However, as previously noted, there are several industries that were more highly impacted by the pandemic, and we are beginning to see more and more bankruptcies in these industries.
Industries most affected and showing the most increase in bankruptcy rates include:
- Real estate showed an increase in bankruptcies from 605 in 2019 to 985 in 2020.
- Oil and gas had an increase from 236 bankruptcies in 2019 to 785 in 2020.
- Restaurants showed an increase from 400 bankruptcies in 2019 to 660 in 2020.
- Entertainment increased bankruptcy rates from 132 in 2019 to 524 in 2020.
- Retail showed an increase from 284 bankruptcies in 2019 to 440 in 2020.
These numbers are just a sign of how devastating the pandemic has been for these industries as well as others such as tourism, gaming, and hotel industries. As we saw with the effects of the 2008 financial crisis, the peak in bankruptcy filings that the economic recession directly caused didn’t happen until 2010. It is likely that individual and business bankruptcies will begin to greatly surge during the second half of 2021 and throughout 2022 and into 2023.
Even with government assistance, many companies can only pay their workers what they’re owed before shutting down. These struggles will continue while our economy goes through its healing process.
The good news is that bankruptcy is always an option for individuals and businesses alike. The government-sanctioned process of permanent debt relief through bankruptcy has been and will continue to provide support for those struggling financially.
To learn more about how filing for bankruptcy in Luverne, MN, and the local region can help you get back on your feet as an individual or business, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.
