Rising Interest Rates Are Pushing Queens Families to the Breaking Point: Why More Residents Are Seeking Bankruptcy Protection in 2024

The financial landscape in Queens has become increasingly treacherous for residents struggling with debt as interest rates continue to climb throughout 2024. Along with these balances, there has been an increase in the interest rates on those balances in conjunction with the increase in the Federal Reserve’s benchmark borrowing interest rate to combat inflation. As interest rates rise, the amount of interest that accrues on these loans also increases, resulting in higher monthly payments.

The Perfect Storm: Interest Rates and Bankruptcy Filings

Personal and business bankruptcy filings rose 16.2 percent during that period, compared with the previous year. According to the Court’s statistics, annual bankruptcy filings totaled 486,613 in the year ending June 30, 2024, compared with the previous years’ filings totaling 418,724 cases. This dramatic increase reflects the mounting pressure on American families, particularly in high-cost areas like Queens.

According to the Center for Microeconomic Date at the New York Federal Reserve, credit card debt hit a record high in the first quarter of 2024 at 1.14 trillion dollars, and delinquency rates for credit cards are now at 3.2%. Along with these balances, there has been an increase in the interest rates on those balances in conjunction with the increase in the Federal Reserve’s benchmark borrowing interest rate to combat inflation.

Queens Real Estate: A Unique Challenge

Queens residents face a particularly challenging situation when it comes to real estate-related financial distress. Brooklyn, Queens real estate bankruptcies most common in US. The US Bankruptcy Court for the Eastern District of New York, often overshadowed by its sister court in Manhattan as a hub for corporate restructuring, has edged out all 93 other US federal districts when it comes to real estate-related bankruptcy filings over the last several years.

“It has a lot of residential buildings, many of which carry mortgages that are subject to rising interest rates.” The disparity makes sense considering the real estate market in Brooklyn and Queens and rising interest rates over the last two years, according to Scott Markowitz, co-chair of the bankruptcy and corporate restructuring practice at Tarter Krinksy & Drogin LLP in New York.

How Rising Interest Rates Impact Queens Families

Rising interest rates can lead people to need to file for bankruptcy because of the increase in monthly loan payments. If you are already struggling to make ends meet, the increase in your monthly payments could push you over the edge, making it difficult to keep up with your bills and ultimately leading to bankruptcy.

For Queens homeowners, the situation is particularly complex. When interest rates rise, mortgage rates can also increase, making it more expensive to buy or refinance a home. If you have a variable, rather than a fixed interest rate on your mortgage, the rising interest rate can suddenly make the mortgage payments too high to afford.

The Broader Economic Context

We see the rise in consumer bankruptcy filings as a lagging indicator resulting from consumers being pushed to their financial limits. Rising living costs, increasing housing and insurance expenses, high interest rates, and mounting debt in both credit card and auto loan sectors have led many to leverage their credit lines more than ever. The strong job market has been supporting the rising debt levels, but continued debt at high interest rates has pushed an increasing segment of consumers over the edge to bankruptcy.

In addition, inflation itself has led to an increase in filings as Americans must choose between paying for necessities versus paying their debt balances. Specifically, the increase in inflation has resulted in significant increases in rent, food, and other everyday necessities.

Legal Options for Queens Residents

When facing overwhelming debt in this high-interest environment, Queens residents have several legal options available. Filing bankruptcy can relieve the pressure of high debt and give you a fresh start. It won’t increase income but it will allow you to devote the income you do have to the critical expenses of living in the current economy.

For those in Queens seeking experienced legal guidance, working with a qualified bankruptcy queens attorney can provide crucial support during these challenging financial times. The Law Offices of Ronald D. Weiss, PC have been supplying expert bankruptcy, foreclosure defense, and debt negotiation services since 1993. We offer practical, compassionate solutions customized to each client’s financial situation. Ronald D. Weiss P.C. has been successfully representing individuals and businesses in financial distress, helping them achieve a fresh start and regain control of their finances.

Looking Ahead: What Queens Residents Should Know

As the Federal Reserve prepares to cut interest rates, if the economy continues to slow, we expect the bankruptcy rates to continue to rise. As the Federal Reserve prepares to cut interest rates, if the economy continues to slow, we expect the bankruptcy rates to continue to rise. This suggests that Queens residents may continue to face financial pressures even as economic conditions potentially shift.

Debtor attorneys are already reporting that their phone lines are ringing off the hook with consumers urgently trying to find ways to manage their payments. One debtor attorney recently reported accelerated interest in bankruptcy unseen since the aftermath of the Great Recession.

The combination of rising interest rates, increased living costs, and record-high consumer debt has created a perfect storm for Queens residents. For those struggling with unmanageable debt, understanding that bankruptcy protection exists as a legal safety net can provide hope for a financial fresh start. Getting initial information and advice is free. Our approach is personalized to your specific situation and goals.

As economic conditions continue to evolve, Queens residents facing financial hardship should consider consulting with experienced bankruptcy professionals who understand both the local market conditions and the complex interplay between rising interest rates and personal financial stability.