March experienced the highest monthly increase in new bankruptcy filings across all chapters— 43,425 of them— in 12 months, according to a press release from Epiq, a tech-enabled provider of intel to the legal services industry and corporations, which this week released its March 2021 bankruptcy filing statistics from its AACER bankruptcy information services business.
Representatives from Equip say the increase is driven by 41,150 new non-commercial consumer filings, a 41% monthly increase as well as the largest individual month of new filing activity since the onset of the pandemic in March 2020.
Chris Kruse, SVP of Epiq AACER said bankruptcy filings in March saw large increases over February due to promising developments related to the coronavirus.
"The vaccination roll-out and corresponding economic recovery are gaining momentum that will accelerate the return to pre-pandemic new bankruptcy filings levels," Kruse said. "We approach the second quarter of 2021 cautiously anticipating the bankruptcy backlog that emerged during the pandemic may be peaking."
There were 106,958 total new bankruptcy filings across all chapters for the first quarter of 2021, down from 177,245 in the same period in 2020. The two largest increases in March were in non-commercial consumer filings with 30,802 new Chapter 7 cases and 10,265 new Chapter 13 cases, increases of 9,939 and 1,945 over February 2021, respectively. Commercial Chapter 11 filings were down 9% over February with 384 new filings in March.
A study following the Great Recession found that higher numbers of bankruptcies could slow the foreclosure process for struggling homeowners, "modestly."
"Filing for bankruptcy adds a little more than a year to a normal foreclosure process," according to the study.
The study went on to reveal how lenders also are affected by borrowers in bankruptcy.
"Although foreclosure sale price, in nominal terms, exceeds a filer’s own estimates at filing, about 65 percent of lenders still lost money, and the average loss amounted to 28% of what was owed to the mortgage lender."
Of course, today's foreclosures process is initially halted by COVID-19 related forbearance programs.
Recent reports show the number of new forbearances declining, but many remain in extensions.
After last month's report, Kruse said he and his colleagues continue to expect new filings will "grow substantially in the second half of 2021, notwithstanding any likely short-term stimulus."
Epiq's AACER bankruptcy information services platform is built with advanced data, technology to create insight and mitigate risk for businesses impacted by bankruptcies.
The company offers complimentary bankruptcy statistics and monthly email updates for both commercial and non-commercial (consumer) bankruptcy filings for Chapter 7, Chapter 11, and Chapter 13 cases.
Registration for these free resources is available on its Bankruptcy Statistics and Trends page.