US bankruptcy filings reverse downward trend; jump 39% in March over February
The effects of government supports given to businesses and individuals last year owing to Covid-19 seems to be petering out as total bankruptcy filings in the US go up by 39% in March 2021 compared to the previous month.
A total 43,425 bankruptcy filings were made in March 2021, a 39% increase over the 31,221 filings during the previous month of February, according to data provided by Epiq.
Similarly, 41,150 total non-commercial filings for March represented a 41% increase from 29,256 filings in February 2021. The 2,275 total commercial filings in March represented a 16% increase from the 1,965 total commercial filings during the previous month. Commercial chapter 11 filings decreased 9% in March to 384 from the 420 commercial chapter 11 filings in February.
Explaining the surge in bankruptcy filings in March Chris Kruse, senior vice-president of Epiq AACER, says: “The vaccination roll-out and corresponding economic recovery is gaining momentum that will accelerate the return to pre-pandemic new bankruptcy filings levels. We approach the second quarter of 2021 cautiously anticipating the bankruptcy backlog that emerged during the pandemic may be peaking.”
“While the government has extended economic stabilization measures and lenders remain flexible to meet the economic hardships of the COVID-19 pandemic, bankruptcy provides a proven shield to families and businesses with mounting debt loads and financial uncertainty,” said American Bankruptcy Institute Executive Director Amy Quackenboss.
“Recent action by Congress and the administration will ensure that households and small businesses continue to have greater access to the financial fresh start of bankruptc,” she adds.
President Joe Biden on March 27 signed the “COVID-19 Bankruptcy Relief Extension Act” into law to extend provisions providing financially distressed consumers and small businesses greater access to bankruptcy relief. The legislation will extend personal and small business bankruptcy-relief provisions that were part of last year’s CARES Act through March 2022.
Some of the key provisions of last year’s relief packages were the increased debt limit to $7.5 million for small business debtors electing to file under subchapter V and allowing individuals to seek COVID-19–related hardship modifications, among other changes.
For the first calendar quarter of 2021 (January-March), 106,958 total bankruptcy filings represented a 40% decrease from the 177,246 total filings during the same period last year at the start of the pandemic (filings started showing their largest decreases due to the pandemic in the second calendar quarter of 2020). Consumer filings also decreased 40% to 100,669 filings in the first quarter of 2021 from the 167,376 consumer filings during the same period in 2020. Total overall commercial bankruptcies decreased 36% in the first quarter of 2021, as filings were down from the 9,870 to 6,289 during the first quarter of 2020. Total commercial chapter 11 filings dipped 25% to 1,283 during the first calendar quarter of 2021 from the 1,709 total commercial chapter 11s during the same period in 2020.
The average nationwide per capita bankruptcy filing rate for the first three months of 2021 increased to 1.38 (total filings per 1,000 per population) from the 1.23 filing rate of the first two months of the year.
Also Read: US bankruptcy filings in January drops to a 15-yr low
