The COVID-19 virus could influence bankruptcy rates

On Behalf of | Mar 18, 2020 | Bankruptcy

The spread of the COVID-19 virus is weighing heavily on the minds of Americans. As schools, restaurants and other establishments temporarily close, Connecticut workers have even more to worry about. People living paycheck to paycheck or those who are already behind on bills may want to consider their current financial positions and whether it might be time to plan for bankruptcy in the future.

As people wait for their places of work to reopen, it is possible that many people will not have a job to return to. The economy is likely to slow down in the face of this unavoidable situation and will strain profits in businesses both small and large. This may lead to layoffs.

One of the biggest struggles laid off and out-of-work people might face is keeping up with their auto loans. Americans were carrying $1.33 trillion in auto loan debt at the end of 2019, which was $16 billion more than during the third quarter. Not only did consumers add to their auto debt, but over seven million people are at least 90 days behind on their loan payments. That is more than in 2010 at the end of the Great Recession, when only six million people were that far behind.

It is easy to ignore current financial worries when also worrying about one’s own health, but that does not mean it is a good idea. Virtually everyone in Connecticut should strive to have a solid understanding of their current finances, including debt. For some people, this may be the wake up call to take action by either paying down debt of filing for bankruptcy.