U.S. bankruptcy filings for 2020 hit their lowest level since 1986 as a flood of government support programs offset at least temporarily the full brunt of the coronavirus pandemic and a related recession, Epiq AACER reported on Friday.
The firm’s compilation of bankruptcy cases showed the Chapter 11 filings used to reorganize larger businesses still jumped 29% in 2020 to 7,128, compared to 5,158 in 2019, a tally that included major retailers like J.C. Penney driven under by the biggest economic downturn in a century.
But overall filings, including all personal and other business bankruptcies, for the year were 529,068, compared to nearly 800,000 annually in recent years, and triple that in 2010 at the end of the last recession.
The low level of bankruptcies has been one of the more perplexing dynamics of a pandemic era that has seen millions of jobs destroyed, record numbers of people collecting unemployment insurance, and small businesses forced to close to combat the spread of the coronavirus.
Government unemployment insurance, business loans and other programs ended up replacing much of that lost income, pushing savings to record levels and keeping households and businesses afloat -- at least for now.
A further $900 billion recently approved by Congress may continue to push a full reckoning down the road.
But Epiq AACER Senior Vice President Chris Kruse said in a press release he expects household and other non-commercial filings “to grow substantially in the second half of 2021,” as government programs end and debts from the last few months come due.
Though many households used government stimulus or increased unemployment benefits to pay down debts, for example, others are wracking up obligation by delaying rent and mortgage payments.
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