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Experts predict a surge in these two types of bankruptcy filings in 2022

Economic experts predict the pandemic and impending inflation will contribute to a surge in bankruptcy filings in 2022. The continued impact of the pandemic, from the initial wave of COVID-19 to the repeated spikes due to multiple variants have resulted in a workforce forced to adapt to remote working. Many will remain remote leading to a reduction in corporate leases hurting real estate investors. Although the Feds have kept interest rates low, they announced increases beginning as early as March.

These factors will likely lead to a surge in two types of bankruptcy filings in 2022.

#1: Business filings.

The first surge will likely involve businesses filing for relief through bankruptcy. Our system recognizes businesses as their own entities and allows financial relief through bankruptcy in certain situations. Those that qualify can generally take one of two options: a fresh financial start with a focus on liquidation or more manageable repayment plans for existing financial obligations through restructuring.

#2: Individual filings.

Individuals can also make use of the bankruptcy system to regain their financial footing. Two of the most common options for relief are the Chapter 7 and Chapter 11 petitions. The Chapter 7 can result in the discharge or forgiveness of most qualifying debts while the Chapter 11 results in a repayment plan.

Individuals with high asset or high income generally do not qualify for Chapter 7 or Chapter 11. Instead, relief is available through a Chapter 13 bankruptcy petition. This form of relief focuses on reorganization as opposed to liquidation and is particularly useful for sole proprietorships.

Take-away lesson

Regardless of the surge in bankruptcy business owners and high asset individuals who are looking for a fresh start in 2022 should take note. You are not alone, and options are available to help get you on firm financial standing so you can move on in the new year.