By most measures, the Tampa Bay area’s economy is healthy and growing. The housing market remains strong, jobs continue to grow and hotels have seen record-setting numbers in the first quarter of 2019. However, despite these signs of economic prosperity, there has been an increase in bankruptcies in the area.
This increase in bankruptcy is causing concern among experts—especially since the reason for this increase in filings remains unclear.
Making money and spending more
In 2018, the Tampa Bay area saw the first yearly increase in bankruptcy filings since 2010. Chief Bankruptcy Judge Michael G. Williamson says that he is not sure why the filings have increased, considering the overall strength of the economy. The judge thinks that one possible reason for this increase may be that people are spending more optimistically because of the other positive economic factors.
Consumer debt is growing nationwide. In February, consumer debt reached an unprecedented $4 trillion dollars nationally. More consumers are obtaining employment, but it seems that many may be living above their means.
In Tampa Bay, the problem is sharper, as the bankruptcy courts were the 2nd busiest in the nation last year. Filings have continued to increase in the area in 2019.
How does consumer bankruptcy affect businesses?
When bankruptcies occur in great quantities, consumer confidence may go down, and they may tend to save more and spend less. This in turn can affect businesses’ revenues and profits.
For business owners who have benefited from increased consumer spending recently, the increase in consumer filings may be a sign that consumer spending could potentially tighten in the near future. This in turn could cause economic growth to stagnate in the Tampa Bay area.
If your business is in financial straights
Bankruptcy is not always a negative indicator for the economy. After all, filing for bankruptcy can help your business remain afloat and continue to contribute to the economy.
Though it may seem scary, filing for bankruptcy can actually allow you to restructure your business’s debt and buy yourself extra time to turn a profit.