More people are continuing to file for unemployment benefits. According to the Department of Labor, last week, 6.6 million filed for unemployment. There are almost 17 million people who have filed for jobless benefits in the past three weeks. With many businesses staying closed and stay-at-home orders in place, unemployment may continue to rise.
In Missouri alone, there were about 104,000 initial unemployment claims filed last week. This is in addition to the more than 62,000 new claims filed in Missouri the week before.
Bankruptcy Filings for Missouri Businesses and Individuals
Many companies and individuals are already filing for bankruptcy related to the coronavirus and COVID-19 epidemic. The XFL suspended operations and has filed for bankruptcy. The league filed for bankruptcy after the entire season was canceled early. A large amusement park operator has also filed for bankruptcy. The movie theater chain AMC is also reportedly looking into filing for bankruptcy.
However, some predictions indicate that the peak of bankruptcies in the U.S. won't happen until next year. The Altman Z Score model was created by Edward Altman, a professor at the Leonard N. Stern School of Business at NYU. The score uses a number of financial indicators to predict a company's probability of filing for bankruptcy. The Z score is based on factors including:
- Working capital,
- Retained earnings,
- Operating income,
- Market value of equity,
- Total liabilities,
- Total sales, and
- Total assets.
Altman predicts the peak of bankruptcies won't happen during the next year and will not be more than during the financial crisis. However, bankruptcies may break dollar amount records because there are greater amounts of outstanding debt now than in prior downturns.
The last peak of personal bankruptcies occurred near the end of the Great Recession in 2010, with about 1.5 million personal bankruptcies. Federal Reserve bank research suggests coronavirus-related bankruptcies could reach 1 million.
How Many in Missouri Will File for Bankruptcy
The number of individuals and businesses in Missouri that will eventually file for bankruptcy related to the financial effects of coronavirus may depend on a number of factors. Small businesses may be able to apply for coronavirus Small Business Association (SBA) loan relief for emergency loans of up to $2 million. However, it may not be enough for some businesses to continue operating, depending on how long stay at home orders last.
Currently, individuals who are out of work are able to get partial wage replacement through unemployment insurance. Federal money is being added to many workers' unemployment benefits, with an extra $600 per week until the end of July.
However, if individuals are unable to get back to work, the longer they are out of work may increase the chance that they may have to file for bankruptcy. If people are out of work, they may have also lost access to healthcare plans. A medical emergency, illness, or surgery without insurance may cost more than many families have in assets and can lead to medical bill bankruptcy.
Missouri Bankruptcy Lawyer
Getting started on filing bankruptcy today can be a way to get a fresh start after the financial crisis. If you have questions about filing for bankruptcy in Missouri, contact the Joshua Wilson Law Firm in Raymore today. Contact us online or by calling (816) 331-9968. We maintain a virtual capable law office to keep you safe.