According to the latest AIS Insight Report, December bankruptcy filings totaled to 34,298, breaking November’s record as the lowest monthly total of filings since January 2006.
Our December analysis of Chapter 13 and Chapter 7 bankruptcies revealed that filings continue to be well below the month averages (Figures 2 & 3). Chapter 7 bankruptcies yielded a 1% decrease from 24,345 filings in November 2020 to 24,111 filings recorded in December 2020. In addition, according to our proprietary database, this is the lowest month total on record for Chapter 7 bankruptcies since January 2006. On the other hand, Chapter 13 bankruptcies increased by 3%, however, it’s still well below the monthly averages (Figures 2 & 3).
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Chapter 11 filings reflected a 39% decrease when compared to November 2020, however, Chapter 11 bankruptcies continue to grow year-over-year (Figures 5-8) . This is due to the economic fallout from COVID-19 and and the creation of the new Chapter 11, Subchapter V protection, which was introduced in February 2020 with the Small Business Reorganization Act.
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The highest percentage of bankruptcies for December 2020 came from the South (East) (28%) followed by North Central (East) (19%), Pacific (14%), South (West) (14%), Northeast (12%), Mountain (7%) and North Central (West) (6%) regions of the country (Figure 9).
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As mentioned in previous months, data confirms that 2020 continues to be an unusual year (Figure 10). A five-year analysis of bankruptcy filings shows a major trend deviation.
With a new COVID-19 relief package and the extension of the federal moratorium on foreclosures and evictions, experts believe bankruptcies could remain below historic averages until these programs conclude.
Figure 10
To download the full November Insight Report, click here.