Keeping You Up-To-Date On Bankruptcy And Business Financial News.
Business Debts Hit Records Dating Back To 1952
Firm debts increased by $754.8 billion in the first quarter of this year. This is the biggest increase in debt dating back to 1952. The debt hit $16.8 trillion, which now surpasses household borrowing. At the same time debt is increasing, household net worth dropped from $117.3 trillion to $110.8 as stock prices dipped. Interest rates have dropped to near zero, while unemployment has hit a level not seen since the Great Depression. Corporations and individuals have been taking on debt at rates that are unsustainable, and the pandemic has exposed the vulnerability created through excessive debt. To read more on this topic, please visit bloomberg.com. [article published June 11, 2020]
Chapter 11 Bankruptcies Are Up 48% While Total Bankruptcy Filings Are Down 42%
The American Bankruptcy Institute published the latest numbers on bankruptcy filings. The article identifies 722 Chapter 11 bankruptcies filings in May as opposed to 487 in May 2019. There were 39,969 total bankruptcies filings in May (1.98 filings per 1,000 people), which was down from 68,860 (2.09 filings per 1,000 people) bankruptcies in May 2019. These numbers may be a result of the government’s ability to keep consumers solvent during the pandemic. Hopefully, May’s Chapter 11 filings will not influence future consumer filings. [article published June 4, 2020]
Five Tips For Small Businesses To Survive This Pandemic
The American Bar Association provided a great article about the following five things that can help you and your small business survive this economic downturn:
- Stay current on legislation. Congress is introducing laws daily that can affect your business.
- Take the grant or small business loans offered by the government. Although this may add to your debt, it may be the only solution.
- Consult a reputable bankruptcy attorney. Your bankruptcy attorney will help explain how to navigate your financial distress.
- Remember that your business debts may not be your personal debts. Although many people sign personal guarantees on loans and other obligations, sometimes your business is solely responsible for its debts. Ensuring that you have as little personal exposure as you can is another good reason to talk with your bankruptcy lawyer.
- Be proactive when thinking about your next steps. Look for financial opportunities, consult with your financial advisor, or discuss your issues with your bankruptcy attorney.
To read more about this issue, click on the link above. [article published March 25, 2020]
40% Of Low-Income Workers, 19% Of Workers Making $40k to $100K, and 13% Of Workers Earning Over $100k Have Lost Their Jobs In March
Washingtonpost.com has an interesting article discussing the severe financial issues that surround both individuals and small businesses. According to a federal survey, over 18% of Americans do not believe that they have enough money to pay their bills, while 35% of laid-off workers thought they would miss at least one payment in April. The Coronavirus has also struck businesses. 17% of companies say that they do not have enough cash reserves to last three months or longer without revenue. 7% of businesses have no cash on hand, while 9.5% cannot cover more than one week of operating expense. [article published May 14, 2020]
As Unemployment Hits 14.7%, Congress Considers More Aid
Unemployment hit 14.7% in April and many expect it to exceed 20% by the end of May or June. The Whitehouse is considering a cut to the payroll tax, which is the tax that funds Social Security and Medicare, while the House is working on a bill to add more money for state and local governments, coronavirus testing, and the US Postal Service. To read more about this issue, visit the Reuters.com site. [article published May 10, 2020]
As Global Declines Continue, The United States Drops Out Of The Top 20 In the Rule of Law Index
The Worldjusticeproject.org compiled a list of eight factors that measures how well a country’s justice system operates. The United States fell to number 21 this year. The United States’ global rank for each factor was 36th for civil justice, 22nd for criminal justice, 20th for regulatory enforcement, 22nd for constraints on government power, 19th for the absence of corruption, 13th for open government, 26th for fundamental rights, and 28th for order and security. Denmark, Norway, Finland, Sweden, Netherlands, and Germany were the top six countries, respectively. [index published March 11, 2020]
The Government Has Started Taking Applications For The Second Round Of PPP Loans.
After running out of money in 13 days the first go around, the federal government has set aside another $360 billion in emergency funds for small businesses through the Payroll Protection Program. This article identifies the number of processed loans, which shows the plight of the American small business. The SBA is having tremendous problems processing these loans, which is creating a lot of frustration with both the banks and the small businesses attempting to obtain a loan. To read more about this matter, read this great article from nytimes.com. [article published April 27, 2020]
$8 Trillion In Economic Benefits, And Up To 50% Of Lives Saved Through Moderate Social Distancing
Washingtonpost.com has a great article on the number of lives that can be saved through moderate social distancing, and the net economic benefit that the saved lives are worth to the U.S. economy. The article sites how the virus could kill up to 2.2 million people in the U.S., but moderate social distancing may save up to 1.1 million lives. The dollar value to the U.S. economy of these saved lives is $8 trillion. Please click on the link above to read the article. [article published March 30, 2020]
The Government Orders Mortgage Payment Reduction Or Suspension For Up To 12 Months
NPR.org recently reported that homeowners who have lost their jobs because of the coronavirus might be eligible for up to 12 months or payment reductions or suspension. People may be able to testify about their distress over the phone and may document the hardship at a later date. Please read the article if you think you may fall into this scenario. [article published March 19, 2020]
Fannie Mae, Freddie Mac, HUD Are Suspending All Foreclosures And Evictions
The government announced that the Department of Housing and Urban Development is suspending foreclosures and evictions until April. If you have an FHA-insured Title II Single Family forward and Home Equity Conversion mortgage and are having difficulty paying your mortgage, you should contact your bank immediately to explore your options. Housingwire.com has a great article on this matter. [article published March 18, 2020]
The Senate Voted In Favor To Block A Secretary Of Education Rule
Thehill.com has a quick article discussing how the Senate just voted to overturn a rule set in place by the Secretary of Education that restricts the “borrower defense” rule meant to protect students that were misled by for-profit educational institutions. [article published March 11, 2020]
Ever Wonder How Much The Average American Spends On Christmas
Magnifymoney.com has a great article discussing the money spent during the holiday season and which generation spent the most. It is interesting to see that 78% of the people will not pay their holiday debt off in January, while 15% will only pay the minimal amounts owing on that debt. [article published December 27, 2019]
The Cost of Having a Child In The United States Exceeds $4,500.00, Even With Insurance
A study looked at 657,061 women who had insurance between 2008 and 2015. Out of pocket costs increased approximately $1,400.00 – $1,700.00 during that time. As many expected, the percentage of women with insurance deductibles also rose from 69 to 87 percent. The Atlantic’s article is an interesting discussion on this subject. [article published January 6, 2020]
Small Business Optimism Index Increased to 102.4 in October
Small business owners’ business optimism outlook increased by 0.6 of a point in October. The biggest issues identified by business owners is finding qualified labor. CalculatedRISK has an interesting article outlining this issue. [article published November 12, 2019]
American’s Consumer Debt Hits $13.95 Trillion
Consumer debts have hit almost $14 trillion with home mortgages taking approximately 66% of the debt. The biggest shift in debt since the securitized mortgage meltdown is in student loan debt, which has doubled and is now the second-largest consumer debt. For more information, check out the Reuters.com article. [article published November 13, 2019]
More People Are Finding Themselves Underwater On Their Vehicle Loans
The Wall Street Journal has a great article detailing the problems with trading in your old vehicle to purchase a new one. Over 33% of the people who traded in their vehicles in the first nine months of 2019 find themselves underwater (negative equity) on their loans. [article published November 9, 2019]
It Might Be Time To Tighten The Purse Strings
Two-thirds of all big cities are predicting a recession, while the Midwest is financially declining. A few of the indicators of a possible recession are the slowing general fund revenues, weakening property tax receipts, and the beginning of spending growth being outpacing by revenue growth. For more information on this matter, please visit nlc.org. [article published October 28, 2019]
The Federal Reserve Cuts Interest Rates Once Again But States The Cuts May Stop In The Near Future
The Central Bank lowered its benchmark funds, which are those that banks charge each other for overnight lending, by 25 basis points. The new range is between 1.5% and 1.75%. To read more about how this will affect most forms of revolving consumer debt, please visit cnbc.com. [article published October 30, 2019]
Treasury Department Is Rolling Back Regulations Meant To Keep Corporations From Moving To Other Countries
In this article, the NYTimes.com discusses how the Treasury Department is rolling back regulations meant to stop corporate inversions. The current administration calls the rules a redundancy since the tax breaks should curtail corporations from moving outside the United States. However, it appears the corporate tax breaks are doing little to stop corporations from moving. [article published October 31, 2019]
Personal Loans Are Outpacing Credit Cards And Auto Loans As The Fastest-Growing Debt Category
Axios.com has an interesting article discussing wages vs. cost of living for the lower and middle-income households between 2008 and 2018, and how the disparity is pushing people to obtain personal loans to pay their bills. [article published October 30, 2019]
Student Debt Nearly Doubles U.S. Housing Market
Student loans have reached $1.5 trillion, with Millenials making up approximately 34 percent of the total student borrowers. Montanans have roughly $3.3 billion in student loans, with 111,000 student loan borrowers. The average debt per borrower is $29,837. Please visit realtor.com if you would like a better understanding of this financial problem plaguing our economy. [article published October 15, 2019]
Easing Derivative Rules For Banks
The Federal Reserve proposed a rule to relax the cash reserve requirement for derivative trades between affiliates. Please visit Reuters.com if you would like to read more about it. [article published October 28, 2019]
Online Installment Loans
Subprime lenders use the online installment loan as a new vehicle to strap the middle class with large sums of debt. This new vehicle appears to have taken the place of the dwindling payday-loan market. Please visit Bloomberg news to read more about it. [article published October 29, 2019]