You’ve probably heard the word “recession” a lot lately on the news, at the dinner table, maybe even at work. Simply put, a recession is when the economy slows down, people have less money to spend, and jobs become harder to find. Whether we’re heading into one right now is something economists are still debating. But the warning signs are hard to ignore, and many Iowans are already feeling the pinch.
More Americans are filing for bankruptcy than in recent years. In 2025 alone, over 574,000 bankruptcy cases were filed across the country; an 11% jump from the year before. That number has gone up every single quarter since hitting a low point in mid-2022.
To put it simply: more and more people are finding themselves unable to pay their bills, and they’re turning to bankruptcy for relief. Nearly 4 in 10 lenders surveyed by a major law firm said they believe the U.S. is either already in a recession or will be within the next year. More than 1 in 4 of the lenders said a significant portion of their loans are already going unpaid.
Why Are So Many People Struggling?
Several things are hitting ordinary families at the same time:
Credit card and loan debt is piling up. By the end of 2025, the number of people falling behind on credit card and car loan payments was the highest it had been since 2010. This is hitting working- and middle-class families the hardest.
The cost of everything keeps rising. Tariffs, which are taxes on imported goods, have driven up prices on everyday items. Economists estimate that more than half of those added costs are being passed directly to consumers. That means higher prices at the grocery store, the hardware store, and everywhere else.
Iowa is especially vulnerable. Economists at Iowa State University have warned that Iowa could actually struggle more than most other states in 2026. Why? Because Iowa’s economy depends heavily on agriculture, which has been hit hard by trade policies that have lowered crop prices while keeping production costs high. Those struggles don’t stay on the farm — they ripple out into the businesses, banks, and communities that depend on agriculture.
What Would a Recession Mean for You?
Recessions and rising bankruptcy filings tend to go hand in hand. If a recession hits in 2026, most economists think it would be a moderate one, not as severe as the 2008 financial crisis. But even a mild recession can have a major impact on your personal finances.
Think about it this way… if you’re already stretched thin and then you lose your job, your hours get cut, or an unexpected expense shows up that could push your budget past the breaking point.
Signs You Should Talk to a Bankruptcy Attorney Now
You don’t have to wait for a financial disaster before asking for help. In fact, the earlier you get advice, the more options you’ll have. Here are some signs it may be time to have a conversation with us:
- You’re only making minimum payments on your credit cards and the balances keep growing
- You’ve missed a payment or started getting collection calls
- You’re using credit cards to pay for basics like food and utilities
- Losing your job or taking a pay cut would mean you can’t pay your bills
- You’re worried about losing your home or your car
None of these automatically means bankruptcy is the right move for you. But they are warning signs worth taking seriously.
Bankruptcy Isn’t a Failure, It’s a Legal Tool
There’s shame attached to the word “bankruptcy,” but there shouldn’t be. Bankruptcy law exists for a reason: because bad things happen to good people. Medical emergencies, job losses, divorce, economic downturns. These are real life situations that can knock anyone off their feet.
You don’t have to wait for things to get worse. If the economic headlines are making you nervous about your own finances, pay attention to that feeling. A conversation with the Nancy L. Thompson Law Office could give you the clarity you need to make smart decisions before things get harder.
