CHATTANOOGA, Tenn. (WDEF)- The coronavirus pandemic has taken a toll on the economy in recent months and health experts believe a second surge is expected.
So does this mean bankruptcies will increase in the state of Tennessee?
Mark Young is a consumer bankruptcy attorney based in Hixson.
Young says a spike in bankruptcies is inevitable, “I don’t think there is any question about that it’s just a matter of when.”
With unemployment benefits running out at the end of this month, Young says people in debt or unemployed are going to feel the financial pressure and will soon seek to protect themselves through bankruptcy relief.
Young also suggests landlords will continue to struggle if the government protects tenants from being evicted, “They can’t collect their rent. Small business can’t work because the people are laid off, and it’s just has a domino effect.”
Jeanne Trewhitt owns a Child’s Garden Boutique in Chattanooga and she rents out her building to several tenants. She said when the coronavirus pandemic hit, she made adjustments so her tenants businesses can stay afloat.
“I’ve lowered the rent and worked with them if they need more time to pay because we’re all in this together.”
Young says landlords and small businesses will take the hardest hits if another economic shutdown occurs, “As job losses come about, the small businesses are the first ones to go out of business. Disposable income is going to go down so much people are not going to want to spend money they don’t have.”
While Truit understands the harsh reality she may face, she says small businesses should focus on affordability of their products, “You look at your pricing and you try to be competitive. I know the box stores may have a lower price but we do watch our pricing on things.”
Individuals and small businesses have two bankruptcy filing options: Chapter 7 can clear an individual’s debt but takes a toll on the overall credit score and Chapter 13 works as a three to five year payment plan, paying back creditors while allowing you to take control of your credit.
Attorney Mark Young recommends reaching out to a bankruptcy expert sooner rather than later.