US bankruptcy filings decline 41% in October; Chapter 11 commercial filings rise 4%
Data by Epiq
Total US bankruptcy filings in October decreased 41 per cent from last year, according to data provided by Epiq Systems Inc. The 40,209 total filings in October 2020 were down from the 67,858 filings registered in October 2019.
The 37,688 consumer filings in October 2020 also represented a 41 per cent decrease from last year’s consumer total of 64,279. Overall commercial filings in October 2020 totaled 2,521 filings, down 30 per cent from the 3,579 in October 2019.
Chapter 11 commercial filings increased slightly as the 550 filings in October 2020 were up 4 per cent over the 530 recorded in October 2019. Throughout 2020, more than one-half of the commercial chapter 11 filings have been related filings by subsidiaries within a corporate group.
Commercial bankruptcy is filed under Chapter 11 of the bankruptcy code. In chapter 11, one may continue to operate the business, but the creditors and the court must approve a plan to repay the debts. There is no trustee unless the judge decides that one is necessary; if a trustee is appointed, the trustee takes control of your business and property.
“Families and businesses are faced with increasing financial challenges due to the COVID-19 pandemic and growing debt loads,” said Amy Quackenboss, Executive Director, American Bankruptcy Institute (ABI).
He, however, warned that expiration of government relief programs, high unemployment and a difficult financial outlook for many sectors will likely lead to filings increasing in early 2021.
Total bankruptcy filings in October 2020 represented a 1 per cent increase from the 39,713 total filings in September. The 37,688 consumer filings in October represented a 2 per cent increase from September’s consumer total of 37,030. October 2020 business filings decreased 6 per cent to 2,521 from September’s business total of 2,683. The 550 commercial chapter 11 filings recorded in October 2020 represented a 27 percent decrease from the 749 commercial chapter 11 filings in September.
The average nationwide per capita bankruptcy filing rate in October was 1.78 (total filings per 1,000 per population), a slight decrease from the filing rate of 1.81 during the first nine months of 2020. Average total filings per day in October 2020 were 1,915, a decrease of 38 per cent from the 3,084 total daily filings in October 2019. States with the highest per capita filing rates (total filings per 1,000 population) in October 2020 were Alabama (4.00), Delaware (3.71), Tennessee (3.54), Mississippi (3.01) and Nevada (2.99).
