Maine bankruptcy filings were down 50 percent in August from a year earlier and have been down nearly every month since the pandemic began, but experts expect that trend to reverse in the near future, the Portland Press Herald reported. A combination of government financial support, banks’ willingness to defer loan and interest payments, and a moratorium on evictions and foreclosures have kept most consumers and businesses afloat and out of insolvency. But as aid runs out, courts reopen and banks call in loans, bankruptcy experts forecast more people and companies will seek relief from insurmountable debt in the months ahead. “Now that the money has been cut off, you are going to see things become more difficult for people,” said James Molleur, who has bankruptcy law offices in southern Maine. “People do not tend to file for bankruptcy when things are getting worse; they file when they hit bottom. I don’t think we’re there yet.” Maine consumer bankruptcies year to date were down 14 percent in July from 2019, according to the American Bankruptcy Institute. The per capita rate of bankruptcies in Maine was the third-lowest in the country, according to institute statistics. Nationwide, bankruptcy filings are down 25 percent compared with a year ago. The number of businesses filing for chapter 11 bankruptcy has ticked upward this year, aided by changes to federal law that make it easier for small employers to restructure to resolve debt, said Jeremy Fischer, an attorney with Drummond Woodsum in Portland. Maine lenders’ willingness to work with borrowers to defer or modify loan payments is a major reason few consumers and businesses entered bankruptcy proceedings so far this year, Fischer said. But that leniency will not last forever. “Lenders are responsible to their owners just like every other business,” he said. “At some point, you can’t defer payments on most of your loans or the bank will have trouble.” Maine’s relative success at curbing widespread virus outbreaks means businesses did not have to shut down again after being allowed to reopen this spring and early summer. But operating outdoors will become more challenging as late autumn and winter set in, putting extra stress on struggling small businesses, said Andrew Helman, co-chairman of the bankruptcy practice at Murray Plumb and Murray in Portland. If another federal economic stimulus package doesn’t emerge, Helman foresees more business closures and a cascade effect of lost rent payments and property values. “As government assistance dries up and commercial activity fails to return to the normal baseline before COVID-19, we will start to see impacts,” he said.
