The Domino Effect: Why 2026 is the Year of the ‘Job Hugger’

Intro: The “Word on the Street” is Now the Data in the Spreadsheets

As an attorney and professor, I observe the economy through a specific lens: connection. My “word on the street” approach, consulting with thousands of clients, often reveals problems months before the media or government statistics catch up.

In 2025, I warned that economic pressure points were joining forces. Today, in February 2026, the data confirms my predictions. Commercial Chapter 11 filings spiking 76% last month. The financial instability I sensed on the ground is now an official reality as bankruptcy filings also rose for small businesses and consumers.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Updated on February 7, 2026.

Part I: Discontinuing the Data, Policy Failure, and the Economic Consequences

Ignoring financial risk doesn’t make it disappear. When the USDA’s Household Food Security Report was discontinued under the guise of removing “liberal fodder,” it was a failure of critical thinking.

Good public policy requires objective data. Whether you are a Republican or a Democrat, ending a 30-year report on household vulnerability makes it impossible for governments to prepare for the stress we are seeing today. You cannot fix a leak if you refuse to look at the pipes.

Part II: The Atomic Bomb of Student Loan Debt

The student loan crisis is the match that lights the bankruptcy fire. Administrative chaos with student loan servicers like MOHELA, where, in some instances, they duplicated debt, resulted in a credit collapse for thousands of borrowers.

The Default Loop: With nearly 6 million borrowers over 90 days delinquent, we aren’t just seeing poor credit scores; we are seeing the death of economic mobility. A stagnant economy is never a good economy.

The Connection: A student loan default denies you a car loan, which denies you a commute to a better job, which forces you into a “Job Hugging” stance just to survive.

Part III: The Rise of the ‘Job Hugger’ in 2026

We used to talk about “The Great Resignation.” Today, we talk about “The Great Stay.” “Job Hugging” sounds affectionate, but it’s actually a defensive crouch. An employee stays put not out of loyalty, but out of fear. Career ambitions are shelved, left for another day, while salary negotiations are delayed, and burnout is ignored. All to avoid becoming “expendable” in an era of AI integration and a 76% spike in corporate bankruptcies.

This freezes wage growth and signals widespread economic anxiety. It’s why even in my own household, the idea of a cross-country relocation has been moved to the back burner. In 2026, the safest place to be is the job you already have. There’s a time for creativity, and this isn’t one of those times.

Part IV: Interest Rate Cuts Are A Symptom, Not a Victory

When the Fed cuts rates by 0.25%, people cheer. But as my mother used to say in Spanish: “Mi cabeza no es solo para sostener mi pelo,”my head isn’t just to hold my hair. Meaning, use your brain. Apply critical thinking. Look at the other angles.

A rate cut is the financial equivalent of taking Vitamin C during the flu: it means the Fed is trying to prevent a sneeze from becoming a pneumonia.

• Slowing Demand: People aren’t spending.
• Rising Costs: The cut doesn’t fix the $300 grocery bill and the rising costs of utility bills.
• The Reset: If the economy were truly strong, we wouldn’t need a false “stimulus” with interest rate adjustments.

The Professor’s Take: How It’s All Connected

The 11.2% rise in consumer filings we saw in 2025 was just the beginning. The 76% spike in corporate filings in January 2026 is the next domino that will fall and affect households that already have record-breaking debt. As my mom would say, use your head for more than just holding your hair. Look past the headlines and realize that preparedness is your only real protection in the Financial Reset as we knock on the door of economic instability.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

Updated initially on September 30, 2025.