Considering Filing for Bankruptcy in 2022? Here’s What’s Changed
Much like any other aspect of our lives, the COVID-19 pandemic has pushed lawmakers to adjust policies and implement changes. Add the expiration of the eviction moratorium, and it is easy to see that more and more people and enterprises will be filing for bankruptcy in 2022.
Covid-19 Bankruptcy Impacts
On March 27, 2021, President Biden signed the COVID-19 Bankruptcy Relief Extension Act. The so-called Extension Act temporarily extends certain bankruptcy relief provisions enacted as part of the CARES Act. The goal was to provide a cheaper and faster bankruptcy option to borrowers and lenders. The $7.5 million debt ceiling was extended to March 27, 2022, and practitioners expect Congress to enact further extensions.
The federal stimulus packages that the government released following the pandemic are helping many businesses and individual borrowers to stay afloat, but experts believe once those run out, there will be an influx of people filing for bankruptcy in 2022.
Filing for Bankruptcy in 2022 May Surpass the Housing Crisis (2007-2010)
Practitioners believe it is fair to expect an influx of bankruptcy cases, nearly as much (if not more) as those during the housing crisis from a decade ago. People filing for Chapter 13 will still be required to pay back their debt over a three-to-five-year period. However, what may have changed is the reason for bankruptcy, as medical bills or the death of a family member can also increase the burden of debt on some people. The same holds true for those filing for Chapter 7.
Both borrowers and lenders will have to adapt to the shifting bankruptcy landscape in 2022. The best you can do, either as a borrower or as a lender, is to keep track of upcoming changes and consult with your attorney before making any decisions about filing for bankruptcy in 2022.
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