%1

U.S. bankruptcies continued on a four-year decline through the COVID-19 pandemic according to research published by the Administrative Office of the U.S. Courts on Monday, Courthouse News reported. According to the report, "increased government benefits and moratoriums on evictions and certain foreclosures may have eased financial pressures in many households." Bankruptcy filings often climb side by side with unemployment rates. With unemployment peaking at 14.8% in April 2020, some economists therefore expected a subsequent hike in evictions, foreclosures and bankruptcies. The $1.2 trillion CARES Act signed in March 2020 seems to have stanched some of the economic bleeding. The unprecedented stimulus package paid out stimulus checks, increased unemployment benefits, and placed moratoriums on evictions and foreclosures. Between September 2020 and September 2021, bankruptcies fell nearly 30%. Less than half a million individuals, 434,540 declared bankruptcy during that time period, compared with 615,561 a year prior. The 2021 figure includes 16,140 business and 418,400 non-business filings.

Chapter 13 personal bankruptcy filings, which tend to be pricier than the more popular chapter 7 process, are ticking back up after declining during the COVID-19 pandemic due to government interventions, including a moratorium on home foreclosures, WSJ Pro Bankruptcy reported. Chapter 13 bankruptcy filings by individuals rose to 10,764 in October, the highest monthly level this year and the fifth monthly increase since May, according to legal-services firm Epiq. Even after rising steadily since May, monthly chapter 13 filings remain far below levels seen in 2019, before the pandemic, Epiq said, based on data from its Aacer business unit. Meanwhile, the more widely used chapter 7 filings have continued to decline. The end of a government-mandated moratorium on home foreclosures in July could well be driving the latest uptick in chapter 13 filings, because the federal moratorium was a big factor behind the decline in those filings since the pandemic started, said Jialan Wang, an assistant professor of finance at the University of Illinois at Urbana-Champaign.