Americans have faced unprecedented challenges over the last couple of years. In the wake of the COVID-19 pandemic, some industries have not fully recovered while many individuals are still trying to catch up with the bills that piled up due to job losses and sharp drops in business revenue. Now, the effects of an economy that is ramping back up again might require millions of families to seek relief.

Bankruptcies often result from factors like divorces and medical problems. Now, economic turbulence has experts predicting that bankruptcies will rise sharply. Specific elements that could lead people to file include:

• Interest rates — Historically low interest rates have been in place for so many years that some people have built their household budgets without realizing that things could change quickly. Now that the Federal Reserve has indicated that rates will rise to stop the nation’s economy from overheating, borrowers with adjustable rate mortgages or car loans could find themselves struggling to make monthly payments. Likewise, if an emergency occurs that necessitates the purchase of a new vehicle or home, higher interest rates could push families into serious debt.
• Inflation — Prices for groceries, gas, everyday consumer goods and big-ticket items such as cars have shot up faster than they have in four decades. In many cases, wages have not increased by a commensurate amount. Individuals and families living from paycheck to paycheck might not have enough to cover basic expenses.
• Shortages — Supply chain problems have affected all types of businesses, leading to higher prices and long waits for many different products. A new COVID-19 variant or some other significant event might make this situation even worse, limiting business operations and possibly triggering temporary or permanent job losses.  

You might have never thought about bankruptcy before, but it could be the best way to stop harassment from collectors and the terrible feeling of falling further behind each month as you wait for the economy to improve. In a short conversation with a New Jersey bankruptcy attorney, you can get an idea if you qualify under the Chapter 7 means test or if a Chapter 13 repayment plan is the right solution.

The Law Offices of James C. Zimmerman has five locations throughout North Jersey to help guide clients through the bankruptcy process. Please call 973-764-1633 or contact us online to set up a free consultation. We have locations in Vernon, Wayne, Pompton Lakes, Hackensack and Nutley.