Have bankruptcy filings gone up or down because of the 2020 pandemic?

Down, so far down! (Utah is down 32% from last year).

You would think that with so many people out of work (or underemployed), that bankruptcies would be going through the roof. However, everyone is waiting and holding their breath right now. In fact, they’ve been holding their breath since about March of this year. We are at a 14 year low!

According to a blog article from Epiq Aacer, Chapter 13 filings are down 45% from last year, and Chapter 7 filings are down 21% from last year. See: https://www.aacer.com/blog/november-bankruptcy-filings-hit-14-year-low

But why? We have over 4 million mortgages in default (delinquent) here in the U.S. See: https://thehill.com/opinion/finance/516032-the-coming-wave-of-defaults Over 7 million renters are delinquent as well.

We also have over 12.6 million unemployed in the U.S. See: https://www.marketplace.org/2020/10/12/how-many-people-are-unemployed-right-now/

But no one’s filing bk.

One big reason why bankruptcies are down is because we’ve had the mortgage and eviction moratoriums, which were actually just extended to January 31, 2020. See: https://www.housingwire.com/articles/fhfa-extends-foreclosure-and-eviction-moratorium-to-jan-

According to one our bankruptcy judges here in Utah, the reason we’ve seen bankruptcies decline is because potential debtors haven’t been pushed into filing yet. People don’t file bk until they need to. And most people won’t need to until they suffer some kind of critical life event, like a foreclosure/eviction, a garnishment, or a repossession.

This means that we’re still waiting. Once those moratoriums end, we’re going to have a flood of bankruptcies. Until then, I’ll keep staring at the phone trying to make it ring.