In the ever-evolving landscape of the United States’ financial landscape, 2023 witnessed a significant surge in bankruptcy filings, marking an 18% increase. This surge was driven by a combination of factors, including higher interest rates, stricter lending standards, and the ongoing reduction of pandemic-era financial supports. While the numbers have risen, they still remain below pre-pandemic levels, indicating that the nation’s financial recovery remains a work in progress.

Understanding the SurgeThe Surge in US Bankruptcies: Challenges and Solutions

In 2023, total bankruptcy filings, encompassing both commercial and personal insolvencies, rose to 445,186, a substantial increase from the 378,390 filings seen in 2022. A closer look at the data reveals that commercial Chapter 11 business reorganization filings skyrocketed by 72%, increasing from 3,819 in the previous year to 6,569. Simultaneously, consumer filings saw an 18% increase, rising to 419,550 from 356,911 in 2022.

December 2023 saw a slight dip in total filings, with 34,447 cases compared to 37,860 in November. However, it is important to note that this number was still 16% higher than the previous year, indicating a persistent trend in bankruptcy filings.

Future Projections

Looking ahead, the trend in bankruptcy filings is expected to persist into 2024. While there is ground to cover to reach the pre-pandemic levels of 757,816 bankruptcies filed in 2019, several key factors are contributing to this ongoing surge.

  • Runoff of Pandemic Stimulus: The gradual reduction of pandemic stimulus packages has left many individuals and businesses facing financial hardships, contributing to the uptick in bankruptcy filings.
  • Increased Cost of Funds: Rising interest rates and the cost of borrowing have made it more challenging for both consumers and businesses to manage their debts, leading to an increased need for bankruptcy protection.
  • Higher Interest Rates: The Federal Reserve’s aggressive interest rate hikes to combat inflation have affected borrowing costs and overall financial conditions for businesses and households.
  • Rising Delinquency Rates: As delinquency rates edge higher, more individuals and businesses are seeking bankruptcy protection as a means to address their financial challenges.
  • Historic Levels of Household Debt: The New York Federal Reserve reported that household debt reached a record high of $17.3 trillion, placing additional strain on individuals and families.

Challenges Faced by Creditors

As bankruptcy filings continue to escalate, creditors encounter a myriad of obstacles in their pursuit of owed debts. These challenges encompass navigating intricate legal procedures, safeguarding their rights and interests, and devising strategies to mitigate financial losses.

The Role of a Creditors Rights Attorney

In times of financial turbulence, seeking counsel from a proficient creditors rights attorney is essential. These legal professionals specialize in advocating for creditors’ interests, employing strategies to recover owed debts despite the challenges posed by bankruptcy filings.

One of the primary advantages of consulting with a creditors rights attorney is their expertise  in assessing the debtor’s financial situation and determining the most effective course of action to maximize debt recovery. They explore various avenues, including debt negotiation, asset investigation, and litigation, to ensure their client receives the compensation owed.

Additionally, creditors rights attorneys navigate the intricacies of bankruptcy proceedings to protect their clients’ rights and interests. They employ tactics such as filing proofs of claim, challenging dischargeability of debts, and representing creditors in bankruptcy court to pursue every available avenue for debt collection.

Furthermore, these attorneys engage in relentless pursuit of debtors, utilizing skip tracing techniques, asset searches, and enforcement of judgments to recover outstanding debts. Their comprehensive approach aims to secure the maximum recovery for their clients, even in the face of bankruptcy filings.

Conclusion

The surge in US bankruptcies in recent years underscores the ongoing financial challenges faced by individuals and businesses. As the financial landscape continues to evolve, seeking the guidance of a debt collection attorney can be a crucial step in addressing these challenges.

FAQsThe Surge in US Bankruptcies: Challenges and Solutions

1. What are the different types of bankruptcy filings available to individuals and businesses?

Bankruptcy law provides for several different types of bankruptcy filings, each tailored to specific circumstances:

  • Chapter 7: Liquidation bankruptcy, where non-exempt assets are sold to repay creditors, and remaining debts are discharged.
  • Chapter 11: Reorganization bankruptcy primarily used by businesses to restructure debts and continue operations.
  • Chapter 13: Repayment plan bankruptcy for individuals with regular income to reorganize and repay debts over time.

1. How can a creditors’ rights attorney help in recovering debts despite bankruptcy filings?

A creditors’ rights attorney employs various strategies to maximize debt recovery even in the presence of bankruptcy filings. These may include debt negotiation, asset investigation, litigation, filing proofs of claim, challenging dischargeability of debts, and representing creditors in bankruptcy court.

2. What tactics do creditors’ rights attorneys use to pursue debtors and secure outstanding debts?

Creditors’ rights attorneys utilize a comprehensive approach to pursue debtors and secure outstanding debts. This may involve skip tracing techniques, asset searches, enforcement of judgments, and relentless advocacy on behalf of their clients to achieve the maximum recovery possible.