Consumer Bankruptcy, COVID-19

Personal Bankruptcy Filings Drop in Light of COVID-19 Pandemic Relief

Personal bankruptcy filings are down, leaving many financial analysts questioning whether the drop in filings can be attributed to financial relief offered from governmental pandemic relief programs or to other economic factorsThis stimulus relief offered consumers a much-needed financial boost, but the question remains how long this boost will hold off future bankruptcy filings. 

The number of consumers reporting problems with paying their bills decreased between June 2019 and June 2020, according to figures from the Consumer Financial Protection Bureau (CFPB).  The number of personal bankruptcies filed dropped 38 percent over a 12-month period between March 2020 and March 2021. 

Government stimulus checks, decreased consumer spending, and the availability of mortgage forbearance programs could be part of the reason for this decrease in filings. During this periodconsumers have also reported cutting back on discretionary spending on expenses, such as vacations  

Normally, a decrease in bankruptcy filings indicates an overall improvement to consumers’ financially lives, but experts warn against being too optimistic about these figures. Considering the COVID-19 pandemic is entering its second and the number of consumers who have died or become seriously ill during this time, it is unlikely that all consumers are thriving financially. 

The federal bankruptcy court system attributes the decrease in bankruptcy filings to many different factors, including a reduced amount of consumer spending, moratoriums on evictions and foreclosures, as well as the temporary closure of courtrooms for in-person hearings.  

In this study, the CFPB surveyed the financial lives of approximately 1,700 consumers, giving these individuals a series of subjective questions to answer regarding their finances. The number of survey participants reporting that they had money remaining in their accounts at the end of a month increased by 3.9 points to 46.6 percent. The number of consumers reporting that their finances were controlling their daily lives dropped 8 points to 32.7 percent.  

In the four years immediately preceding the COVID-19 pandemic hitting the U.S., consumer bankruptcies never fell below 750,000 annually. However, between April 2020 and April 2021, the number of consumer bankruptcies filed dropped to 473,000. At the same time, the number of business bankruptcies fell by 13.9 percent.  

As the government stimulus programs wind down and the moratoriums on foreclosures and evictions come to an end, this trend could quickly change, which is why many financial experts remain only cautiously optimistic about these figures.  

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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.   

Consumer Bankruptcy, Coronavirus, COVID-19, Small Business Bankruptcy

U.S. Bankruptcy Filings Drop 38 Percent

Bankruptcy filings are on the decline, according to a recent report.  Statistics released by the Administrative Office of the U.S. Courts, reveal bankruptcy filings dropped 38.1 percent for the 12-month period ending March 31, 2021. This dramatic drop in filings coincides with the COVID-19 pandemic, which first disrupted the economy in March 2020.

Bankruptcy filings fell for both personal and business bankruptcies. Non-business filings fell by a total of 38.8 percent, while business filings fell 13.9 percent.

Unemployment and layoffs initially soared at the beginning of the pandemic. However, several factors may have contributed to the sharp decline in bankruptcy filings. These include, but are not limited to: federal court closings, state lockdown orders that caused a decline in spending, increased government benefits, and eviction moratoriums have eased financial pressures on households.

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.

Source: U.S. Courts.gov