VIRGINIA BEACH, Va. (WAVY) — We are living in uncertain financial times. If history is any indication, one local attorney predicts we will see many people filing for bankruptcy before the year is up.
Personal bankruptcy filings are currently low: 46 percent less this April than last April, according to the American Bankruptcy Institute.
Local bankruptcy attorney Matt Hahne, with Boleman Law Firm, believes people are just holding on.
“That’s a result of the stimulus package and also the non-collection efforts that are going on right now,” he said.
The Supreme Court of Virginia has ordered a freeze on foreclosures and evictions, but what happens when the freeze thaws?
Hahne is looking to history for an indication of what’s to come. The American Bankruptcy Institute reports while personal bankruptcies are down, Chapter 11 filings — that is, big businesses bankruptcy filings — increased 26 percent last month.
“We’re predicting that [in] the fourth quarter, there will be a tremendous amount of consumer bankruptcies,” Hahne told WAVY.com.
When those large companies lay people off, they can’t pay their bills, he said.
Couple that with an end to the stimulus package and an uncertain job market, and it may be a recipe for disaster.
“People who are suffering from loss of income and that have overwhelming debt, they really want to get all their options now; know what’s out there for them,” he said.
Hahne advises you pick up the phone and call a bankruptcy attorney for a free consultation.
“Most people that come in our office and hear about bankruptcy are shocked and amazed at how easy the process can be,” he said.
Hahne urges people to call before doing something drastic, such as selling something valuable or asking for a loan. He warns specifically against payday loans, which are short-term, high-cost loans for generally less than $500. They’re usually paid in a single payment on the borrower’s next payday, according to the Consumer Financial Protection Bureau.
Half of Hahne’s clients who filed for bankruptcy in April got caught up in a cycle of payday loans and couldn’t get out.
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