Bankruptcy Trends, Consumer Bankruptcy

Bankruptcy Courts See an Increase in Consumer Bankruptcy Filings

U.S. consumer bankruptcy filings are on the rise again, across all chapters, according to data recently published by Epiq Bankruptcy. This increase in filings represents a change in the trend previously seen with new bankruptcy cases, as numbers have been on the decline since the start of the COVID-19 pandemic.

According to Epiq, the total number of commercial bankruptcy filings increased by twelve percent (12%) in January. In January 2023, 1,694 new commercial bankruptcy cases were filed, as compared to 1,508 filed in January 2022.

Bankruptcy Trends, Business Bankruptcy

2022 U.S. Corporate Bankruptcy Filings Drop to a New Low

The number of U.S. corporate bankruptcy filings have fallen to a low not seen in over 13 years, which has many financial experts questioning whether this trend will continue into 2023.

In 2022, 391 companies filed for bankruptcy. This number is the smallest amount reported from any other comparable period dating as far back as 2010 where 828 corporate bankruptcy cases were filed, according to data from S&P Global Market Intelligence. This drop in filings came after a rise in filings was seen in December when 49 filings were made, as compared to the 31 filings made in November. November and December 2022 saw more filings than any other month in 2022, but the year still ended with a low number of overall corporate filings.

Bankruptcy Trends

Consumer Bankruptcy Filings Increase in August

Bankruptcy filings increased in the month of August for all chapters of consumer bankruptcy cases, according to a new study conducted by Epiq. A total of 35,355 bankruptcy filings were reported in August, which represents a 10 percent increase from the total of 32,276 reported in August 2021.

Commercial bankruptcy filings also increased by six percent in August. A total of 1,861 filings were made in August 2022, as compared to the 1,753 cases filed in August 2021. Individual bankruptcy filings increased by 10 percent. A total of 33,494 filings were made in August 2022 and 30,523 were filed in August 2021.

Bankruptcy Trends, Consumer Bankruptcy

While Bankruptcy Filings Were Down in 2021, Financial Challenges Await for 2022

Even with the ongoing COVID-19 pandemic, the number of bankruptcies filed in 2021 were down from previous years. However, financial experts fear that these lower numbers will not continue as the COVID-19 pandemic continues into 2022.

According to numbers from the federal court system, a combined total of 434,540 bankruptcy filings were made by both individual consumers and businesses through September in 2021. This figure is 30 percent lower than it was from a similar report issued previously for 2020 bankruptcy filings. According to the federal court system, 612,561 bankruptcy cases were reported for that same period in 2020 and 766,674 cases were filed in 2019 for this same period.

While it is possible that a similar trend could be seen in 2022, it is unlikely. One reason for this decrease in bankruptcy filings could be the number of increased government benefits issued in 2021, including a third round of stimulus checks, monthly child tax credit payments, and additional jobless benefits issued by the government.

Many other benefits have ended as of the end of 2021, including the eviction and foreclosure moratoriums that were keeping financially struggling consumers in their homes. Without additional aid, these individuals may have no other choice but to seek bankruptcy for relief. With no future relief efforts expected in terms of stimulus checks and monthly child tax credit payments, consumers who relied on this safety measure in 2021 to stay afloat may soon find themselves struggling. The last enhanced child tax credit was issued as of December 15, 2021, with no future plans for additional credits in the near future. Certain relief efforts are being continued, including the pause on federal student loan payments. This pause has been extended through May 1, 2022.

Traditionally, it can take a consumer up to two years of struggling financially before making the decision to file for bankruptcy. Often, this decision occurs when the person’s hand is forced through something like an eviction or foreclosure notice. However, given the fact that many consumers have been barely getting by to avoid filing for bankruptcy, that timeline may escalate somewhat once relief programs expire.

The additional factor of inflation has made the situation for many consumers worse. Many consumers have resorted to using credit cards and loans to pay for living expenses. According to the Federal Reserve Bank of New York, credit card and student loan debt rose by $61 billion to a whopping $4.25 trillion in the third quarter of 2021.

A combination of all of these factors could result in a worsening financial picture in 2022, but it remains to be seen just how much of an effect these will have on the number of bankruptcies filed in 2022.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Bankruptcy Trends

Latest Bankruptcy Filings Mixed

August and September 2021 bankruptcy filings have been mixed. While certain types of bankruptcy cases have increased, others have gone down, according to data from Epiq’s AACER bankruptcy information services.

According to Epiq, overall bankruptcy filings for all chapters have declined by four percent, with 32,263 new filings made in August 2021 to 30,907 new filings reported in September 2021. Additionally, individual Chapter 7 filings decreased by nine percent between August and September.