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Bankruptcy Filings Continue Downward Trend

The latest bankruptcy filing data from Epiq AACER has found that, in the month of February, bankruptcy filings across all chapters came in at 31,188 filings, a decrease of 3% over January 2021’s filings and a 45% decrease over February 2020’s filings, where there were 56,209 new cases.

“Access to capital, agreements among stakeholders, and general economic uncertainty has caused a continued pause in commercial Chapter 11 filings in February,” said Deirdre O’Connor, Senior Managing Director of Corporate Restructuring at Epiq AACER.

The number of bankruptcy filings may plummet even further, as the Biden Administration has taken measures to inject $1.9 trillion into the economy through the American Rescue Plan stimulus package. The Plan will funnel billions into the housing market to ease pandemic-related housing issues, with $27.5 billion allotted for emergency rental aid.

Bankruptcy_Chart_Epiq_03_17_21

“New bankruptcy filing rates continue a historic slide” said Chris Kruse, SVP of Epiq AACER. “The bubble that emerged last April as the global pandemic picked up steam is now getting bigger, and the backlog of new filings is growing. We still expect new filings rates will change course and grow substantially in the second half of 2021 as vaccination rates climb, government stimulus ramps down, and COVID-19-related policies are relaxed, forcing filers to evaluate their financial positions.”

A WalletHub study last fall found that Las Vegas was the American city experiencing the most financial distress related to COVID-19, with bankruptcy filings included as one of the primary metrics being tracked, alongside credit score, internet searches for "debt," and other factors. After Vegas, the other top cities experiencing financial distress such as increased bankruptcy filings included Chicago, Houston, San Antonio, Texas, and Dallas.

With Americans still struggling with their finances, the Mortgage Bankers Association (MBA) reported earlier this week that approximately 2.6 million homeowners remain in forbearance plans. The MBA’s latest Forbearance and Call Volume Survey found that the number of loans actively in forbearance decreased six basis points, to 5.14% from 5.20% of servicers' portfolio volume from the period of March 1-7.

To learn more about how bankruptcy is impacting the industry, click here to read our interview with BK Global CEO Brad Geisen.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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