How Rise in Personal Bankruptcy May Connect to Business Woes
From small family companies to large corporations, many businesses have recently struggled with serious debt. This rising trend may also cause an increase in personal bankruptcy.
As a Memphis bankruptcy lawyer, I’ve seen this before. I’d like to explain how one trend usually connects to another.
The Recent Rise in Corporate Bankruptcy
Two factors help explain why so many businesses are currently struggling:
Firstly, the COVID-19 pandemic significantly impacted businesses of every size. Many companies faced enormous challenges, including:
- temporary closures
- reduced customer demand, and
- long-term supply chain disruptions.
Social distancing measures and lockdowns forced businesses to adapt their operations. Many lost money and laid off staff. And some never fully recovered.
Secondly, inflation can severely affect any business — and the last year shows it. Not only did inflation lower the value of every dollar a business earned; it also changed the way they could depend on banks.
During high inflation, the banks raise interest rates and lend money more carefully. As a result, some businesses can’t access the funds they need to keep going.
Impact on Personal Bankruptcy
When businesses suffer in this way, it can lead to higher rates of personal bankruptcy, both for owners and employees.
Rise in Personal Bankruptcy for Small Business Owners
For owners, a struggling business can translate to tighter personal finances. As a business owner myself, I can attest to the many times we’ve had to make personal sacrifices in order to fulfill payroll and keep the business going.
In desperate situations, owners may dig into their personal savings and even their assets in order to save the company. When that happens, you might risk foreclosure or repossession, because you’re putting all your resources into the business.
There are ways to protect your personal savings from corporate failures; but even with every protection in place, the financial strain on a business can still affect an owner’s personal finances.
Rise in Personal Bankruptcy for Employees
When a business struggles, employees often face even more financial risk and less control than the owners. Layoffs, lower wages, and inflation all impact a person’s take-home pay.
Our Memphis firm has helped countless people who’ve gotten into debt because of layoffs and company failures. When an employer can’t pay their staff any longer, it leaves people unable to cover their basic expenses. 60% of United States adults live paycheck-to-paycheck, so even a few weeks without income can change everything for a normal American family.
What’s more, medical debt is one of the most common types of personal debt in the US. And when businesses struggle, benefits packages change or get cancelled. Without insurance (or with worse insurance than before), employees’ medical debt can skyrocket.
Free Consultation to Help You With Personal Debt
If you’re struggling with personal debt because of a business going over, first off, know that you aren’t alone. This is a rising trend that probably won’t go away for a while, and millions of people are in the same position.
You may be struggling with credit debt, medical bills, wage garnishment, or foreclosure. Whatever debts scare you the most, don’t let it stop you from getting help.
Our attorneys have helped thousands of people get out of debt in the Memphis area. We’ve seen it all, and we can help you, too.
In fact, we offer a free consultation to answer all your questions and help you figure out the best path forward. Sometimes that might be bankruptcy, and sometimes not.
No matter what you need, if you have a lot of debt, you shouldn’t wait to deal with it. Your personal finances are too important, and your future is too valuable to let business troubles bring you down forever.
Get back on track with a free consultation. Just call us at 901-327-2100 or fill out the form on this page to have one of our attorneys contact you. We look forward to helping you get a fresh start!