Personal Bankruptcy Filings Seem Eerily Quiet During Coronavirus Pandemic:
Ohioans are resilient people and are exhausting every possible resource to keep their families afloat financially during the COVID-19 pandemic. In this together, we continue to navigate through the pandemic despite being affected by job losses, loan deferments, stays on evictions, and dwindling personal savings accounts.
In March 2020, Ohio Governor Mike DeWine implemented several orders to help Ohioans keep safe and healthy as the Coronavirus pandemic began to quickly spread in Ohio. Three months later we are still in a state of flux, wondering whether a second wave of the Coronavirus pandemic will reach our Lake Erie shores, like a Tsunami hitting a small island in the middle of the Pacific Ocean. As some of the health restrictions have eased in Ohio, both individuals and businesses are looking for ways to recover from the financial damages they have incurred during COVID-19. But if personal bankruptcy is the next step, when might be the right time to file for bankruptcy relief and get a fresh start? Should I file now, or should I wait a bit longer?
Curiously, personal bankruptcy filings in northern Ohio were well below average last month. According to statistics released by the U.S. Bankruptcy Court, there were 1,279 personal bankruptcy filings in northern Ohio in May 2020. This number of personal bankruptcy filings is compared to 1,986 in May 2019, representing a shocking 39% decrease during the Coronavirus pandemic which has effectively shut down Ohio financially. If you had to read that last sentence twice, you are not alone. A closer look at personal bankruptcy filings in the metro Toledo, Ohio area shows similar results with only 253 bankruptcy filings in May 2020, compared to 414 during May 2019, a steep 39% decrease in personal bankruptcy filings.
A Calm Before The Storm?
At first glance, it’s hard to see the reasons behind a significant drop in the number of personal bankruptcy filings in Ohio during a health pandemic. Many Ohioans have lost their jobs, postponed payments on their rent or mortgages, and now face a month or two of arrears on their car loans. Despite many of us returning to work, albeit under some sort of restrictions, the financial wreckage of the last 3 months may be too steep to overcome, thus necessitating the need for a fresh start.
Given the fallout from the Coronavirus pandemic, why might personal bankruptcy filings in Ohio be so eerily quiet? Is this more akin to a calm before the storm? It might be a combination of resiliency, short term loan deferments, and temporary bandaids from the government.
As I mentioned, Ohioans are resilient people. Nobody’s first reaction is to call their local bankruptcy lawyer. Many of us begin with budget cutbacks. Others have found temporary, lower paying jobs to help ease some of the financial pain from the Coronavirus pandemic. However, these lower paying jobs typically do not offer health insurance, which may lead to other problems such as unmanageable medical debts and prescription costs. Additional pressures continue to rise, such as closed daycare facilities, increased consumer prices, loan deferments coming due, and stimulus checks not arriving fast enough.
Stimulus checks and the short term $600.00 bump in weekly Ohio unemployment compensation benefits offer short term relief, but most of us have already spent our stimulus checks and the extra unemployment benefits are scheduled to end in a matter of weeks. These funds were likely used to keep Ohioans financially afloat by paying last month’s rent or catching up on something else. So even with personal resiliency and government assistance, are we seeing the calm before the bankruptcy storm?
Some Experts Predict A Tsunami of Personal Bankruptcy Filings In Ohio.
A large number of scholars and bankruptcy lawyers are forecasting that a storm of personal bankruptcies will hit in the coming months. When to file for bankruptcy relief is more of an individual household decision as some Ohioans are currently running on fumes, while others are continuing to stretch out every last dollar. Industry experts are suggesting a sharp rise in personal bankruptcy filings between July and November 2020. Everyone’s situation is different and one should seek a free consultation with a local bankruptcy lawyer before deciding to file for personal bankruptcy relief.
Filing for bankruptcy relief is a last resort and something that should be planned beforehand . Chapter 7 bankruptcy relief provides a much needed fresh start for individuals and their families. As a general rule, many people look to bankruptcy relief when they have exhausted other options, such as second jobs and stricter budgeting. It is estimated that an average Chapter 7 bankruptcy filing erases nearly $50,000.00 of unsecured debts, such as most debts arising from credit cards, medical bills, vehicle repossessions, certain payday loans, and old utility and cell phone bills. However, Chapter 7 bankruptcy is referred to as “asset liquidation”. Having a conversation about your assets and debts with a local bankruptcy lawyer should offer some peace of mind and valuable insight. The best time to speak with a Chapter 7 bankruptcy lawyer is sooner than later. A simple head start on getting familiar with bankruptcy will allow you to be ready should the need arise. Stay healthy and safe!
Related Article: “Bankruptcy Courts Ill-Prepared For Tsunami Of People Going Broke From Coronavirus Shutdown.” [by Paige Marta Skiba, Economist, Professor of Law, Vanderbilt University, et al; The Conversation; May 13, 2020,