Bankruptcy filings fell in 2021, but post-COVID ‘shadow debt’ may spell trouble
Last Updated: June 19, 2021 at 10:20 a.m. ET
First Published: June 15, 2021 at 2:25 p.m. ET
By Andrew Keshner
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‘As the pandemic relief runs its course, however, mounting financial challenges may result in more households and companies seeking the shelter of bankruptcy
‘As the pandemic relief runs its course, however, mounting financial challenges may result in more households and companies seeking the shelter of bankruptcy’
When the pandemic slammed into America’s economy last spring, some observers said it was a matter of time before consumers turned to bankruptcy to free themselves of debt.
But the surge never came, at least not in 2020. The total tally of bankruptcy cases dropped 30% from a year earlier.
The trend has continued so far this year. The nearly181,000 bankruptcy cases filed by May 2021 is 29% lower than the same point last year, according to statistics compiled for the American Bankruptcy Institute.
Now, a new study suggests the wait will continue — and possibly at a great cost to the people who are facing climbing debt loads.
By filing for Chapter 7 bankruptcy, a liquidation, or Chapter 13 bankruptcy, an installment plan, people and their creditors can work out court-approved arrangements to pay off balances and discharge debts.
People wait an average of 22 months after their first 90-day past-due notice to file for bankruptcy
