Despite a massive wave of Omicron cases sweeping through states across the U.S., most people consider the country to be in a post-pandemic economy. However, while many people are moving on from lockdowns and mandates, millions of Americans struggle to keep their heads above water despite receiving pandemic aid.
So, why are so many people still struggling, and what options do they have?
By the end of 2020, the government had laid out a plan to help Americans and businesses stay afloat amidst the complete shutdown of commerce and the government. PPP loans helped small businesses to keep their doors open while families received monthly payments and enhanced food stamps. Eviction moratoriums gave renters a brief rest bit from rent payments. Students struggling with loans had the choice to make interest-free payments or wait to make payments later.
These temporary measures gave millions of people a break they needed to withstand national lockdowns and fewer customers, but they did not solve the core issues many people face. As much as we would like COVID to be over, cases are still in the thousands every day. Most of us may have picked back up where we started, but for so many Americans, that is simply not an option.
SNAP and Benefit Cliffs
One of the most beneficial government programs was the expanded Supplemental Nutrition Assistance Program (SNAP). SNAP is one of the most widely used food assistance programs available. This program provides low-income individuals and families with an Electronic Benefits Transfer (EBT) card that acts as a debit card to purchase groceries.
In October 2021, the government unveiled an increase in SNAP benefits that would increase the purchasing power of EBT cards. This change is the first significant increase since the mid-1970s. Other increases helped to keep the plan updated according to inflation rates, but the program as a whole was not improved for almost 50 years.
The benefit expansion is worth celebrating, but unintended outcomes make matters worse. As employment changed for Americans in 2021, some families experienced an increase in income – a blessing and a curse.
SNAP benefits are distributed based on income, meaning the more a family or individual makes, the fewer benefits they receive. Many companies increased wages in 2021 in the wake of the Great Resignation – a movement that led millions of people to quit their jobs in favor of better working conditions. As a result, SNAP benefits decreased.
Essentially, as a person’s income grows, their welfare decreases, causing them to be in a worse position financially. This phenomenon is called a benefit cliff. Benefit cliffs, fewer SNAP benefits, and the possible end of child tax credits have left many families without the support they need to survive.
Options for Relief
While there is little these families can do to fix the income to welfare disparity, debt relief is possible through other methods. For those with massive amounts of debt and no way to pay it back, bankruptcy is a positive solution.
While bankruptcy does affect credit, it does not do permanent damage. Not only does bankruptcy discharge debts, but it can also give the debtor an extension on their loans to pay the creditors over time. People who file for bankruptcy can build their credit score back up over time and even get a higher score by practicing good spending habits.
For those with less dire financial burdens, loan modification is an option. This process allows the debtor to modify their existing loan terms to improve their chances of paying it back. The loan is not discharged or rolled into a Chapter 13 repayment plan, unlike bankruptcy. Instead, debtors can negotiate for lower payments and/or an extension.
Whether you choose to file for bankruptcy or pursue an alternative, Buchalter & Pelphrey Attorneys At Law can help. Contact our firm for more information.
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