Inflation and Consumer Bankruptcy

Will high inflation rates result in increased consumer bankruptcy filings in Oak Park and throughout Illinois? According to a recent article in Forbes, “the price for goods and services has increased 7.9% from the same time last year,” which means Americans are experiencing “the highest inflation rate since January 1982.” As a result, many households in the U.S. are struggling financially. The cost of groceries has increased, the cost of gas, electricity, and other utilities has risen sharply, and other expenses have gone up. As the article underscores, “forty percent of adults say their families are worse off financially now than prior to the pandemic,” and many households are struggling financially. Ultimately, inflation could mean that more consumers file for bankruptcy. What do you need to consider?

Take Steps to Avoid Additional Costs

Whether inflation has resulted in a struggle to pay your bills or has merely resulted in increased concern over finances in the future, it is important to take the steps you can now to avoid feeling the effects of inflation as much as possible. First, it is critical to budget for inflation. As the Forbes article explains, you can calculate your own personal inflation rate by subtracting your total spending this time last year from your total current spending to determine your personal inflation rate. Then, you can budget accordingly for the coming months (or longer) by reducing unnecessary costs and expenses.

To reduce certain costs you pay, you should consider your debt and fees currently associated with repayment. If you are paying a significant amount of interest on your credit card bill, you can look into a balance transfer with a 0 percent APR that could save you a significant amount of money. You should also set up alerts for yourself whenever bills are due to ensure that you are not paying late fees or related costs. According to Forbes, it is also a good idea to consider reducing your use of your credit card and paying in cash (or with your debit card). Indeed, it is “easier to overspend with credit cards, since it eliminates the physical process of handing over cash, making it difficult for consumers to truly understand how much they’re spending.”

What to Know About Filing for Bankruptcy

If you were struggling to meet your debt obligations before recent inflation and rising costs, it might be necessary to consider personal bankruptcy. What should you know about bankruptcy? The following are a few key things to consider, and then you should get in touch with a bankruptcy attorney who can answer specific questions about your situation and can assist you with your bankruptcy case:

  • Consumers typically file for either Chapter 7 bankruptcy (a type of liquidation bankruptcy) or Chapter 13 bankruptcy (a type of reorganization bankruptcy);
  • You will need to meet certain requirements to be eligible for any type of consumer bankruptcy;
  • Bankruptcy will impact your credit, but it likely will not have the impact that you are concerned about; and
  • You will not lose all of your assets in a Chapter 7 bankruptcy case (you can exempt many assets with Illinois exemptions), and you will not lose any assets in a Chapter 13 case.

Contact an Oak Park Bankruptcy Lawyer

If you need assistance with a consumer bankruptcy case, you should get in touch with an experienced Oak Park bankruptcy attorney today. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

When Should I Delay a Bankruptcy Filing?

Can I Be Forced to File for Bankruptcy?

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