Bankruptcy is not a word we take lightly. But, it can offer those that need it a fresh financial start. However, while bankruptcy filings are down for the year, experts warn that Texas courts could become overwhelmed by a bankruptcy tsunami soon.
Bankruptcies, by the Numbers
There have been some high profile bankruptcies around the state recently: Neiman Marcus, Fort Worth-based Pier 1 Imports, and JCPenny. Nonetheless, the overall numbers are significantly down.
In our state, from January to June, bankruptcies are down 16%, compared to last year. This breaks down to 5,752 Chapter 13 bankruptcy cases and 8,060 Chapter 7 bankruptcy cases so far this year. Commercial bankruptcies are similarly down as well.
Bankruptcy tsunami looming
Experts believe these numbers will soon swell, so much so that federal bankruptcy courts will likely need to hire staff to handle the tsunami. This is because as federal and state benefits expire, those already struggling, will have little choice but to file for bankruptcy. This includes both people and business.
The tsunami may not start immediately once these federal and state benefits expire, though. Credit card companies, mortgage lenders, and other financial institutions currently have their own assistance programs as well. These include waiving payments, creating customized repayment plans, and even helping people navigate federal and state benefits they may not know about.
At some point though, as history has shown, these lenders will look to collect on these debts. That is when the real tsunami will hit, if it did not already start when the federal and state benefits expired.
For those who cannot wait
For some, waiting for federal and state benefits to expire may not be an option. They may not be getting flexibility from their lenders, or it simply may not be enough. For these people, they should know that federal courts are open to filings. An experienced bankruptcy attorney can walk those interested in a fresh financial start through the process and help them understand whether bankruptcy is the best option.