Stimulus checks and payment protection loans kept many Rockville families and businesses afloat during the pandemic lockdowns. That, combined with courthouses being shut for months, kept personal bankruptcy filings low in 2020 and ’21.
But these vital pandemic programs both ended in 2021. Since then, the economy has become volatile. Many households’ financial woes, which stimulus and PPP loans helped paper over somewhat, are now faced with massive debt. Meanwhile, rising interest rates and inflation are straining budgets even further and making it harder to keep up with debt payments. So it might be no surprise that CBS News reports that filings for personal bankruptcy leaped 20 percent in January compared with the same month in 2022.
The most popular options for consumers
Most individuals who file for bankruptcy protection choose Chapter 7 bankruptcy or Chapter 13 bankruptcy. The former is known as “liquidation” bankruptcy because it discharges most types of debt, such as credit card balances and unpaid medical bills. In contrast, Chapter 13 bankruptcy is a tool for reorganizing your debt into manageable monthly payments over a set period of time. Which option is best for you depends on factors like your household income and the size and nature of your debts.
Whichever form of bankruptcy you file for, the benefits start immediately. Debt collectors must stop contacting you, and filing can put a temporary halt to foreclosure proceedings on your home.
Finding a partner through the bankruptcy process
Choosing the right type of bankruptcy protection on your own can be confusing. If you are considering filing for bankruptcy in 2023, working with an experienced bankruptcy attorney can help you understand which form of bankruptcy is best tailored to your needs.