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The number of people filing a bankruptcy rose sharply in 2023

On Behalf of | Jul 9, 2024 | Bankruptcy

Various social factors influence bankruptcy filings. For example, an overall economic downturn is likely to increase bankruptcy filings. People who lose their jobs may find themselves suddenly struggling to fulfill their basic financial obligations.

Higher interest rates can make the debt that people already have difficult to manage. High levels of social pressure to conform to certain standards, such as wearing designer clothing at a professional office, can also lead to unsustainable levels of financial obligation. A small percentage of those struggling with personal debt eventually decide to file for individual bankruptcy protection.

They ask the courts to temporarily end collection efforts and to discharge the balances owed on specific debts. A successful personal bankruptcy filing can help people regain control of their finances. According to recent data, there has been a noticeable increase in the number of people seeking bankruptcy relief in recent years.

How many people have recently filed for bankruptcy?

A combination of multiple factors likely contributes to the reported increase in bankruptcy filings. Increases in the cost of living tied to high levels of inflation may have put pressure on many people’s budgets. Additionally, the consequences of job losses and revolving debts acquired several years prior may have finally started catching up with many struggling adults in the United States. 2023 saw a notable increase in the number of bankruptcy filings. Individual bankruptcies were up 16% in 2023 based on the number of filings in 2022. There were 434,064 personal bankruptcies filed in 2023.

What do these numbers mean?

For the average person, perhaps the biggest impact an increase in bankruptcy filings may have is on their financial opportunities. Lenders tend to be a bit more cautious during times when bankruptcy filings increase. If the trend continues, those with lower incomes and lower credit scores may have a more difficult time obtaining unsecured credit until the economy improves.

That being said, most individuals are unlikely to feel much impact from the recent increase in bankruptcy filings. If anything, those struggling financially may feel empowered by the realization that many other people also turn to bankruptcy when they struggle financially.

The reduction in stigma that may come from an increase in personal bankruptcy filings could help people feel more comfortable about seeking to regain control over their finances. Recognizing that a personal bankruptcy filing can be a viable solution for debt struggles could help those worried about their finances choose the best means of regaining control. The choice to file for personal bankruptcy is often a difficult one, but it may lead to better financial circumstances in the future.

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The Law Office of Kim Covington, is a woman owned debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 24 years.