ABI: Federal moves keep August bankruptcies from ‘overwhelming the court system’


August consumer bankruptcy filings decreased both year-over-year and month-over-month. The head of the American Bankruptcy Institute explained why that movement happened.

Before getting into the reasoning from executive director Amy Quackenboss, ABI shared data this week provided by Epiq Systems that showed the 36,877 consumer filings in August represented a 42% drop from the consumer total of 63,132 cases registered during the same month last year.

Furthermore, according to the newest data, the 39,349 total U.S. bankruptcy filings completed in August marked a 41% decline from last August’s total of 66,530 filings.

“A number of key factors continued to keep bankruptcy filings from overwhelming the court system,” Quackenboss said in a news release. “The CARES Act helped businesses and consumers initially weather the economic shock of the pandemic, collection, eviction and foreclosure activity was largely suspended, and quarantining measures presented challenges for struggling debtors to meet with attorneys.

“However, with the expiration of government stabilization programs, elevated unemployment levels and growing economic uncertainty, we anticipate a dramatic climb in filings later this year,” she continued.

Perhaps what’s already happening on the commercial side is reinforcing Quackenboss’ projection.

Data from Epiq Systems indicated that commercial Chapter 11 filings in August increased 17% year-over-year, rising from 450 filings to 526 cases. But overall commercial filings in August totaled 2,472 cases, marking a 27% drop year-over-year from the 3,398 filings in August 2019.

Looking at the data from a sequential comparison, Epiq Systems determined that the August tally represented an 8% decrease from the 42,865 total filings in July. The 36,877 consumer filings in August also marked an 8% decrease from July’s consumer total of 40,085.

ABI went on to note that the August business filings dropped 11% to 2,472 from July’s business total of 2,780.

Dissecting the Epiq Systems information further, the average nationwide per capita bankruptcy filing rate in August came in at 1.84 (total filings per 1,000 per population), a slight decrease from the filing rate of 1.89 during the first seven months of the year.

The average total filings per day in August stood at 1,874, a decrease of 38% from the 3,024 total daily filings in the same month last year.

States with the highest per capita filing rates (total filings per 1,000 population) in August included:

1. Alabama (4.16)

2. Tennessee (3.65)

3. Delaware (3.49)

4. Mississippi (3.21)

5. Georgia (3.02)

ABI has partnered with Epiq Systems, a leading provider of managed technology for the global legal profession, in order to provide the most current bankruptcy filing data for analysts, researchers and members of the news media.

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