Chapter 7 Bankruptcy & Inflation
While filing for Chapter 7 bankruptcy will not lower prices on goods and services, it can offer you relief during hard economic times.
In the past year, the United States has witnessed an 8.5% increase in the Consumer Price Index (CPI). In other words, in the spring of 2022 (as compared to spring of 2021), it is 8.5% more expensive to pay for a mix of basic consumer goods such as food, gas, and other necessities. The impact of the inflation varies for each downriver resident, but the overall pain can be felt in everyone’s household in one way or another and to some degree and extent.
Downriver Households Hit Hard by Inflation
Price hikes in the downriver area have been felt by everyone, from the gas pump to the grocery register. For families with mounting debt, it can be especially painful to have to shell out an extra $80-200 per week just for necessities. We are seeing a rise in home foreclosures and bills are going unpaid. This will lead many to seek alternative solutions to help their debt crisis.
Some are in debt due to student loans. The recent announcement from the Biden administration may offer some relief to some households, but many are in debt for other reasons. Credit cards, mortgages, and car loans all create debt, and with rising interest rates, many may end up paying more on their consumer loans as well.
According to a survey by Salary Finance, more families are feeling the pain of inflation than in years past:
- 45% said they were financially stressed, which is higher than any amount in the previous 3 years.
- 75% said that inflation has impacted their finances.
- 55% said they have less cash on hand than last year.
- 76% said that price increases had affected them. That number jumped to 84% for households making less than $55,000 per year.
All of this information indicates that more downriver residents will be looking for financial relief in the coming months. The Federal Reserve has indicated interest rates will be rising again before the end of 2022. So what can be done?
Chapter 7 Bankruptcy Can Help You Deal With Inflation
Filing for Chapter 7 bankruptcy can help alleviate the pressures caused by inflation. While many may choose to scale back costs or attempt to increase their income, this sadly isn’t always an option. Many families deal with ongoing medical expenses that are necessary, and as the economy contracts, earning money becomes harder and harder.
If you are servicing high-cost debt like credit card debt, monthly payments will not reduce your debt because payments will only go towards interest. Filing Chapter 7 bankruptcy could help you absorb increasing prices. Before you may any decisions, however, it is best to first consult with a Michigan bankruptcy attorney to explore your options and make the best decision for your specific situation.
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