Will Hurricane Sandy Increase Bankruptcies?
As a result of the storm, bankruptcy filings may see an uptick. Consumer and personal bankruptcies (Chapter 7 and Chapter 13) and business bankruptcies (Chapter 11) may increase in the next six months to a year.
NORWOOD, MA, November 03, 2012
The full economic impact of Hurricane Sandy probably won't be felt for many months or even years. But it is possible to speculate. Time will tell whether these guesses are correct.Public employees who receive overtime will certainly benefit. Law enforcement, sanitation crews, transit workers and others will find themselves working 12-hour shifts for the foreseeable future and being paid accordingly. And workers in the construction industry will probably see an uptick in work as people begin to rebuild.
However, other employees may not be so lucky. People in hard-hit coastal areas, such as Atlantic City, New Jersey and shoreline areas throughout the East Coast that were flattened by the hurricane may find themselves out of work for a long time. This is especially true for those in the hospitality industry: Hotel workers, casino employees and restaurant workers.
Small business owners in these coastal areas will also feel the consequences of the hurricane. Although some may have insurance coverage that helps them rebuild, many will not. Moreover, small business owners in particular will be unable to generate income during the time their doors are closed. And those that were not physically damaged during the hurricane still experienced significant losses. These range from spoiled product because customers could not get in to purchase food, to messenger services that had no business when the stock market went dark for two days.
As a result of the storm, bankruptcy filings may see an uptick. Consumer and personal bankruptcies (Chapter 7 and Chapter 13) and business bankruptcies (Chapter 11) may increase in the next six months to a year, as people find that they cannot rebuild fast enough or get another job quickly enough to make up for the financial impact of Sandy.
However, most analysts are optimistic long-term, believing that the economic impact of the rebuilding efforts will offset the temporary financial problems caused by Sandy.
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