COVID-19 = rise in bankruptcy and defaults?

[masscredit]

Many people are feeling or going to feel a financial hardship because of all of the businesses that are closing. They say unemployment will be over 20%. Do you think this will lead to a spike in defaults and bankruptcy filings like we saw when the economy went downhill in 2008?  

[sccredit]

Absoluely.  I don't see a way around it.  

[Anonymous]

Unfortunately, yes if things don't get better. 

I have hope that it won't though.

[Anonymous]

There are the working poor and those that live beyond their means regardless of what they earn. Unfortunately, there will be a bump. This crisis will be over in a few weeks. The damage will be done.

[Anonymous]

It's inevitable. No work = no income or reduced income. That's when people decide what they are going to spend their limited funds on, food or bills. 

Been there myself before. 

[Iusedtolurk]

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@masscredit wrote:

Many people are feeling or going to feel a financial hardship because of all of the businesses that are closing. They say unemployment will be over 20%. Do you think this will lead to a spike in defaults and bankruptcy filings like we saw when the economy went downhill in 2008?  

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I feel it really depends on how long this uncharted situation lasts.

My email and mailbox have been inundated with messages from creditors stating they are offering help for those affected by this current situation.

Deferring payments, reducing payments, moving 3 or more auto and mortgage payments to the end, waving interest and penalties,  not reporting negatives to the CRAs, and other things to help during the crisis.

This will help in the short run but if this thing continues like some experts have speculated (a year to 18 months or more) then these offerings are only going to delay the inevitable and that will be a spike in defaults and bankruptcy filings.

It doesn't look like a pretty picture is in the foreseeable future. Some people have already begun to lose ther jobs and even with these short term measures to help from creditors and help from unemployment income the sad thing is some people will be so far behind the eight ball that recovery will not be viable without defaulting on debts and seeking bankrupcty protection.

And that is one data point (if you will) that is totally supported by similar situations in the past.

[AverageJoesCredit]

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@Anonymous wrote:

It's inevitable. No work = no income or reduced income. That's when people decide what they are going to spend their limited funds on, food or bills. 

Been there myself before. 

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Absolutely, food over bills anyday. No other choice .

[blindambition]

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@masscredit wrote:

Many people are feeling or going to feel a financial hardship because of all of the businesses that are closing. They say unemployment will be over 20%. Do you think this will lead to a spike in defaults and bankruptcy filings like we saw when the economy went downhill in 2008?  

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Without a doubt! There are cities like mine that will be devastated. Vegas revolves around hospitality, travel, tourism and conventions. More than a 1/3 of residents are unemployed, more to come.

In survival mode, bills are last. First are food, meds and trying to keep a roof over your head.

[GApeachy]

We picture food lines in the Great Depression.  We will picture toilet paper lines through this........

[donkort]

New York's Governor Cuomo decreed that mortgage payments can be deferred for 90 days without FICO penalty.

I don't know if people would have to "catch up," though.