November Bankruptcies Hit 14-Year Low -- Update
By Alexander Gladstone
November bankruptcy filings in the U.S. hit a 14-year low,
driven by a decline in individuals filing for protection from
creditors as they continue to enjoy the benefits of eviction
moratoriums and other government assistance stemming from the
Total bankruptcy filings amounted to 34,440 for the month, the
lowest monthly total since January 2006, according to data from
legal-services provider Epiq Systems Inc.
The data, however, showed a large divergence between commercial
and personal filings.
Commercial chapter 11 filings for November were up 40%, with 654
new cases compared with 449 over the same period in 2019, according
On the other hand, noncommercial chapter 13 filings, which
enable individuals to restructure their debt, amounted to 137,764
filings year-to-date by the end of November, down 45% over the same
period in 2019 according to Epiq. Noncommercial chapter 7 filings,
which enable individuals to liquidate their assets so as to escape
their debt burden, declined by 21% over the same period.
"As the country continues to battle a surging coronavirus
pandemic, liquidity in the form of government programs and state
eviction moratoriums continue to delay new personal filings," said
Chris Kruse, senior vice president of Aacer, an Epiq business unit
that compiles bankruptcy data.
One factor for the decrease in personal filings is the
uncertainty about the state of the economic recovery. Even though
markets have been buoyed recently by positive developments
regarding Covid-19 vaccines, many individual borrowers are still
unsure about their near-term financial prospects, leading them to
delay making a major personal decision such as filing for
bankruptcy under chapters 7 or 13, according to Deirdre O'Connor,
managing director of corporate restructuring at Epiq.
"These historic-low bankruptcy filings reflect the overall
uncertainty about our economic recovery," Ms. O'Connor said.
"Bankruptcy is a legal tool to restructure, but in this unknown
financial environment the benefit from seeking bankruptcy
protection is unclear for individuals, families and even large
One reason why corporate filings have increased recently while
personal filings have gone in the opposite direction is that
companies often file for bankruptcy for strategic reasons, to
facilitate a merger or buyout for example. Individuals, on the
other hand, don't file for bankruptcy for these reasons, Ms.
Ed Flynn, a consultant at the American Bankruptcy Institute,
recently wrote in a report that chapter 13 filings have fallen by
about 56% since the start of the pandemic. In particular, there are
fewer homeowners filing for bankruptcy protection, which may be a
result of state and federal moratoriums on foreclosures, he
The Federal Housing Finance Agency on Wednesday extended the
moratorium on single-family foreclosures and evictions until at
least Jan. 31.
Also, a bipartisan group of leaders from both houses of Congress
recently submitted a roughly $900 billion proposal for an extension
of coronavirus relief measures.
Write to Alexander Gladstone at firstname.lastname@example.org
(END) Dow Jones Newswires
December 03, 2020 12:59 ET (17:59 GMT)
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