With the current economic slump seeming to affect more people every day, bankruptcy seems to have taken center stage in the news. Accordingly, here are some of the most interesting figures:
Bankruptcies and Economic Downturns
Statistics going as far back as the Great Recession have shown that bankruptcies tend to grow at the start of an economic downturn. This also seems to be the case in the crisis brought about by the COVID-19 pandemic. To illustrate, the website of the United States Courts reports at the end of July 2020, that despite the growing numbers of people losing their jobs due to the pandemic the quantity of combined personal and business bankruptcy filings at the end of that month, fell by 11.8% when compared to the same period of last year. And this figure does not take into account disruptions in some filing activity due to many bankruptcy courts having had limited access since the middle of March.
Retail Bankruptcies Galore
So far, plenty of major retailers have filed for bankruptcy in 2020, including many familiar names. Among them: J. C. Penney, J. Crew, Neiman Marcus, Sur La Table, Stein Mart, Lord and Taylor, Century 21, Aldo, Brooks Brothers, Lucky Brands, Hertz, GNC, and Pier 1. Of the more than 400 companies that have filed for Chapter 11 bankruptcy protection this year, 35 of them reported more than $1 billion in liabilities,
Main Reasons for Bankruptcies
It’s easy to imagine some of the most common causes for declaring bankruptcy. Although many believe that medical expenses constitute the number one reason to file for bankruptcy, here are some of the top ones, some of which might surprise you:
- Loss of income
- Medical expenses
- Unable to continue making mortgage payments or facing foreclosure
- Health issues that cause job loss
- People trying to help friends or relatives
- People unable to make their monthly student loan payments
- Separation and/or divorce
- Social situations such as the birth of a child or the death of a close family member
As you can picture, many people filing for bankruptcy do so for more than one of the above reasons.
Consumer vs Business Bankruptcies
Most of the bankruptcies filed in recent years have been by consumers and not by businesses. This is a dramatic change when considering that, in 1980, businesses accounted for 13 percent of bankruptcies. These days, they account for about 3 percent.
Most Bankruptcies by State
The number of yearly bankruptcy filings varies widely by state. To blame is not only w populous a state is but how lenient their wage-garnishment laws are. Nonetheless, the states with the highest number of bankruptcies are, starting with the largest:
Repeat Bankruptcy Filers
Some recent studies have discovered that 8 percent of the people who file for bankruptcy have done so at least once before. These repeat bankruptcy filers are responsible for 16 percent of all bankruptcy cases.
There is a belief that is widely held by experts that bankruptcy laws are exploited, and they point to repeat filings as proof of their theory. But despite the fact that the government has enacted policies to curb abuse of the bankruptcy system, the new policies that have been put in place have had little to no effect on who declares bankruptcy and how often.
Work with a Trusted Bankruptcy Attorney in New Jersey
If you are feeling overwhelmed by debt and can’t find a way out, you don’t need to become one more of the bankruptcy statistics in New Jersey. You can get the legal help you need and plan the best way to deal with your economic distress. The Law Office of Stuart M. Nachbar P.C. has the bankruptcy attorney in New Jersey you need to start you on the road to financial recovery.