Several states across America, especially in the southern states like Tennessee, Alabama, and Georgia, are experiencing an increase in bankruptcy filings according to NerdWallet.
Market Watch, The New York Post, and CNBC have all published articles speculating on the rise of bankruptcy filings as a symptom of an impending recession. Market Watch in their article “Bankruptcy-related job losses are grimly reminiscent of the Great Recession” , dismissed these findings as a cause for concern, since the massive loss of jobs lost to bankruptcy filings came from large corporations filing for Chapter 11, not personal bankruptcy. Yet a company like Barney’s, a luxury clothing retailer, falling into bankruptcy filings as of last week is as a sign that people are not interested in spending on luxury goods.
But it’s not just Chapter 11 bankruptcies, causing the firing of over 40,000 workers this year, that is tipping the statistic scales. Personal debt has been on the increase to amounts much greater than the Great Recession.
The New York Post pointed out that credit card debt in 2019, estimated $1trillion exceeds that of 2008. Other personal debts, like student loan debt at an estimated $14trillion, exceeds that in 2008 by an estimated $1trillion gap.
‘“No question about the fact that credit quality is declining,” said Dick Bove, a financial strategist at Odeon Capital Group in New York. . .”’ The Post reported.
CNBC’s advice was to start preparing for the recession now by paying off outstanding debts and spending more consciously on consumer goods. By 2020, it won’t be wise to have no safety net when the rug is pulled out from underneath thousands, if not millions, of Americans.
cafecredit with Flickr