Will Inflation Lead to More Bankruptcies in the City of Columbus, Ohio?
Record high rates of inflation are driving up the price of energy and other utilities as well as mortgage payments. Even property values in the greater Columbus, Ohio area are starting to appreciate at a speed that's much faster than would have been expected historically. As a result, there was an expected rise in the total number of bankruptcy filings last year. Economists are predicting this trend to continue throughout 2024.
Bankruptcy declarations have fallen at least somewhat in recent months, but raw numbers show that the total amount of credit card debt in the country is approaching record highs. Delaware, Fairfield and Franklin County residents may soon find themselves using credit cards as a way to deal with rising costs. Consumer price index figures claim that the total cost of consumer items have risen around 7% in the last year, which represents the highest inflation rate in nearly 42 years.
Homeowners who find themselves overextended might start to look at bankruptcy filing as a solution to their economic woes. Federal regulators have attempted to stem the tide of inflation through tax and interest rate hikes as well as spending cuts. This can be a problematic combination, however, since phasing in austerity measures at the same time as new taxes could potentially cause the economy to stagnate.
Some economists have raised warnings about a deepening recession in the first months of this year, which could make the number of people declaring bankruptcy even higher. Supply chain-related problems are continuing to hurt companies in the manufacturing sector, which are further increasing costs irrespective of the national inflation rate. Additional costs may very well get passed onto retailers in the Columbus area, which may then lead to job cuts as well.
Excess levels of market liquidity are making it harder for people to repay any outstanding loans that they might have already taken out. Once they find they can't make good on their debts, these individuals are likely to look for financial relief in whatever form they can find it. Representatives of the Federal Reserve Bank may raise lending rates again in the hopes of outpacing inflation, but there's a good chance that this could just make it more expensive to borrow money.
Lenders are already starting to raise the rates on automotive and personal loans. Mortgages probably aren't far behind. These hikes could translate into longer loan terms, which may cause further economic damage. Individuals who find that they can't get out from under the loans they've already incurred may look to set up some sort of custom repayment plan, which they can do with a Chapter 13 filing.
Area residents dealing with a more serious amount of debt may want to have their obligations discharged completely. They may be able to so, at least to a point, with a Chapter 7 filing. Though there are certainly some drawbacks to declaring bankruptcy, it's a viable option for those who find that they have no other way of dealing with a mountain of back payments they could never hope to cover.