Bankruptcy has long affected Americans, but there is some good news in 2020. According to a new report from Oct. 5, fewer Americans have filed for bankruptcy in 2020 than in 2019 despite the fact that there are 10.7 million fewer jobs in the country and that over a quarter of the U.S. workforce is working in their homes.
Interestingly, bankruptcies are down 27% despite the economic downturn this year has seen. Personal bankruptcies, specifically, were down by 28%, while business bankruptcies dropped by 1%.
While the decrease in Chapter 7 bankruptcies is around 13% lower than in 2019, the same is not true of Chapter 11 bankruptcies. Those have risen by around 35% this year, a result of many businesses struggling. Chapter 13 bankruptcies, which consumers use to pay debt back over time, have also dropped by around 41%.
There could be several reasons for the decrease in bankruptcy filings compared to previous years, especially when considering the poor state of the economy. Many people are on substantial unemployment benefits that are being subsidized by the government. Others may just not be able to file yet, as some attorneys’ offices and courts are backed up with applications, which could affect the numbers. There’s also the potential that some people actually saw a benefit to working from home, reducing the need for day care for their children or reducing expenses related to going in to a job physically.
This information changes frequently with a volatile economy, so though bankruptcies are lower now, they could increase again in the future. If you find that you need to file for bankruptcy, your attorney can help you do so.