The Cost of Living and Bankruptcy: What You Need to Know
Everywhere you turn, it seems like things cost more than they used to, from groceries to rent, gas, even basic household items. And over time, you may feel stressed and out of options. That’s why bankruptcy and the cost of living often impact each other.
For many families in Memphis and across the country, the rising cost of living is becoming more than just frustrating – it’s becoming unmanageable. And while politicians argue back and forth about it, real families suffer in the crossfire.
If you’re finding it harder to pay the bills or keep up with debt payments, you’re not alone. The cost of living crisis is real, and for some, bankruptcy may be the most realistic way to reset, recover, and regain your financial control.
Why Is the Cost of Living So High Right Now?
At the time of this writing in 2025, we’re still feeling the effects of years of inflation, supply chain disruptions, and rising interest rates.
Rent prices are up. Food prices have stayed high. Health care and insurance premiums have jumped.
And if you’re using credit cards or “buy now, pay later” apps to get by, the interest is piling on fast.
Even people with full-time jobs are struggling to stretch their paychecks far enough. That’s because expenses have gone up faster than wages in many industries – especially for working families, gig workers, and retirees.
How Rising Costs Lead to Bankruptcy
When your income stays the same but your expenses grow month after month, the math just won’t work.
Over the past few years, the cost of living has climbed sharply. Consumer prices are now nearly 24% higher than they were in early 2020. Meanwhile, inflation has hovered in the 2-3 % range in recent months.
These increases affect essentials like food, housing, and energy. They squeeze household budgets and make it harder to keep up with debt payments.
As a result, people turn to whatever they can to cover the costs, including:
- Using credit cards to pay for essentials like groceries or gas
- Falling behind on rent or mortgage payments
- Missing medical or utility bills
- Racking up late fees and penalties
- Taking out high-interest loans just to stay afloat
Eventually, the debt becomes too much. Payments get missed. Creditors start calling. You may even face wage garnishment, repossession, or foreclosure. That’s when bankruptcy becomes an option worth considering.
Bankruptcy: A Tool for Relief
If rising costs have pushed you into overwhelming debt, bankruptcy can offer a legal and effective way to start over. Depending on your situation, you may qualify for:
Chapter 7 Bankruptcy
This type wipes out most unsecured debts like credit cards, medical bills, and personal loans. It’s a fast process for anyone with little income or few assets.
Chapter 13 Bankruptcy
This type helps you restructure your debt into a manageable payment plan while keeping your home, car, and other property.
Bankruptcy isn’t something to fear or avoid out of shame. It’s a protection built into the law for exactly this kind of situation. It allows you to reset your finances and focus on what really matters: your health, your family, and your future.
When to Consider Filing
You don’t need to hit rock bottom to seek help. Consider talking to a bankruptcy attorney if:
- You’re living paycheck to paycheck and still falling behind
- Your credit card balances are growing, not shrinking
- You’ve missed mortgage, rent, or utility payments
- You’re getting calls from debt collectors or facing lawsuits
- You’ve tried budgeting or debt consolidation without success
Fortunately, you don’t have to pay anything to get some answers and an idea of what to expect. Our trusted, award-winning Memphis bankruptcy team offers a free consultation, no strings attached.
Let’s Talk About Your Options
The cost of living crisis won’t fix itself overnight. But you can take steps today to protect your financial future.
If you’re overwhelmed by debt and looking for a way out, bankruptcy might be the tool that helps you break free.
Contact us today for a free consultation. I’ll walk you through your options and help you figure out if bankruptcy is the right move for your unique situation.
You deserve a fresh start, and we’re here to help you get it.