Bankruptcy is becoming more common. Recent statistics show an upward trend demonstrating that more and more individuals are filing for bankruptcy. While there has been a small increase – about 1% – in commercial bankruptcy cases, there has been a major increase in personal bankruptcy cases, sitting at about 6%.
In other words, though there are some businesses that will have to declare bankruptcy this year, it is far more likely that individuals will do so. They face the greatest financial risks. Why has this trend begun?
A variety of factors
The truth is that there are many different factors playing into this. Recently, there have been many layoffs, especially in the tech sector. Job loss is one of the main reasons for bankruptcy, so it is clear that many individuals who have lost their employment may have to file if they are not able to find a new job quickly enough. Like with most causes of bankruptcy, job loss is usually out of the hands of the person who is impacted the most. A company may just decide to downsize and there is nothing an employee can do.
Rising costs have also played a role. With inflation and increased prices by corporations – leading to record profits – the cost of living has simply increased for most people. Wages, however, have not kept pace for many workers. This means that someone could be in a financial situation that may have been affordable just a few years ago, but they may now suddenly find themselves facing financial trouble due to these external pressures.
Those who are filing for bankruptcy this year must know all of the legal steps to take and how the process can help them.