By: Destiney Parker-Thompson
In such a state of uncertainty, many consumers are wondering what to do next. Some are mapping out financial decisions, anticipating financial turmoil, while others accumulate debt via deferred payments and forbearances. Looming in the distance is an economic recession that many economists believe is long overdue. Nouriel Roubini, economist and former Senior Economist for International Affairs in the White House Council of Economic Advisers, lists several reasons for the inevitable financial crisis, including an increase in domestic and global inflation and unsustainable fiscal-stimulus policies. With business closings, both temporary and permanent, lay-offs and fluctuating business, COVID-19 has acted as a catalyst to a long anticipated economic recession. Businesses such as J. Crew, Neiman Marcus, JC Penny and rental car giant Hertz are just a few businesses forced to file bankruptcy amid the pandemic. Bankruptcy attorneys and economists legal predict that consumers will not be far behind. In June 2020, the International Monetary Fund warned: “The world is facing its worst downturn since the Great Depression as shuttered factories, quarantines and national lockdowns cause economic output to collapse.” The number of bankruptcy filings compared to recent years is down; however, many consumers are standing in the eye of the financial storm and cannot fully see the depth of damage COVID-19 will have on the economy.
Do not be led astray. The willingness of creditors, landlords and others to defer payments will soon subside and consumers will be left with an accumulation of unpaid obligations. It’s no secret that the economy is on the verge of a long-anticipated recession, and there are several things that may push us over the edge. Continued extensions for payment, forbearances and mandatory grace periods continue to delay the inevitable.
“The novel coronavirus will devastate the global economy, and failure to rein it in risks a worse downturn than the Great Depression.” – Nouriel Roubini (quote from the economist in Project Syndicate column)
Many bankruptcy attorneys worry that the courts are not prepared for the wave of bankruptcy filings currently in waiting. Many believe that the current “calm’ before the storm has given consumers a false sense of security causing many to “sleep” on the avenues that may provide relief following the recession. many of them lack the manpower to handle the number of filings to come. It is not a question of “if” the pandemic will launch the economy into a recession, but “when.” Attorneys are encouraging consumers to act now to ensure they are prepared when the financial apocalypse rears its ugly head. To ensure financial survival, consumers must take affirmative steps now to ensure they are protected and in the best position to obtain financial stability once the sun sets on the horizon.