Why Is Bankruptcy in Memphis Still on the Rise?

So far this year, across the United States, bankruptcies continue an uphill climb. Bankruptcy in Memphis is no exception: personal bankruptcy rose in 2023 and continues to rise in 2024.

So what explains these trends, and what can you do if you’re getting overwhelmed with debt?

What Changed in Recent Years

High Interest Rates

Just as we saw in 2023, when interest rates go up, bankruptcies sometimes follow. If you can’t afford your home, high interest rates make it harder to downsize or find a better option. This means more people resolve to stay in their homes, even when facing foreclosure.

As bankruptcy is one of the number one tools we have to stop foreclosure, it becomes an attractive solution.

Bankruptcy and the End of COVID

In addition, this year continues to bring a gradual end to many Covid rules.

Some, like the foreclosure and eviction moratorium, had a huge impact on limiting bankruptcy filings during the worst of the pandemic. Now, we’re seeing the gradual effects of other protocols coming to a close. This includes financial benefits and tax credits, along with medical benefits like paid leave that gave some people flexibility during early COVID.

Even an end to remote work options can have an impact. The cost for commuting, along with the lack of flexibility for people with disabilities or young children, mean fewer safe work options and a potential loss of income.

Student Loan Repayments

Perhaps the biggest example of COVID benefits ending this past year is the revival of student loans. In fall of 2023, student loan repayments began again in earnest. While the government did forgive a small fraction of some student loans, the vast majority of debtors now have to make their payments again.

This has strained many families’ finances and caused them to increase other debts, including credit card debt.

file bankruptcy in TNBankruptcy Rates Still Lower Than Last Decade

However, current bankruptcy filings still aren’t as high as before the pandemic. While no one answer could explain the difference in consumer choices, I believe a few factors may be at play:

For one, many of us changed our spending habits during the pandemic. We stopped going out as much, traveled less, commuted differently, and found new ways to relate to friends, family, and coworkers using digital media. With personal finances – let alone the global economy – so tight for those years, we even learned how to budget better.

In addition, we saw through the pandemic how many institutions are willing to work with debtors in dire situations. The banks didn’t exactly go under just because they weren’t allowed to foreclose on people for a time, and some were happy to work with debtors.

We’ve long encouraged people to talk with their creditors about their options. For example, if you reach out to your hospital over medical debt, they may lower the debt or allow you to pay a reasonable plan over time. These options received more publicity during COVID, and I believe many people are trying to approach their debt in this way.

Unfortunately, these types of negotiations aren’t binding. If you’re lucky enough to work out a deal with your creditors, they can still go back on their word or sell your debt to other creditors. No matter how good their offer, it isn’t bound by law.

When Personal Bankruptcy in Memphis Might Be the Best Next Step

If you’re overwhelmed with debt and want a binding solution, personal bankruptcy offers a path forward. It stops foreclosure and repossession, ends wage garnishment, and stops creditor harassment.

For four decades, our Memphis bankruptcy attorneys have built a reputation as one of the most compassionate and trusted bankruptcy firms in the Mid-South. Our award-winning team can make sure you have all the information you need to make a wise decision, no matter what kind of debt you may face.

We put together a bankruptcy plan that works for you and your individual goals. And we guide the process every step of the way, with no extra or hidden charges over time.

The decision to file bankruptcy can be difficult, but fortunately the process is easy. If you’re overwhelmed with debt you can’t pay, even after trying so hard on your own for so long, you’ve come to the right place.

We’re here to help, and we offer a free consultation to get you started. All you have to do is call 901-327-2100 or contact us online to schedule a free appointment. We look forward to talking with you.