Bankruptcy filings lowest since 1985 amid pandemic relief

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A plaque is displayed at the entrance of the U.S. District Bankruptcy Court for the Southern District of New York, REUTERS/Brendan McDermid

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  • Personal bankruptcies down 32.7%, commercial cases down 17.7%
  • Record lows coincide with strengthening U.S. economy

(Reuters) - Personal and commercial bankruptcy filings have hit new lows as COVID-19 relief efforts have staved off some financial strain, according to government data released on Wednesday.

The number of new bankruptcy cases filed for the year ending June 30, 2021 are the lowest since 1985, according to the Administrative Office of the U.S. Courts. While commercial filings fell 17.7% to 18,511 compared with the previous year, non-business filings plummeted 32.7% to 443,798.

This is the first full year’s worth of data to be released since the pandemic took hold in the U.S. in March 2020. While unemployment briefly increased at that time, the government said the combination of pandemic benefits and eviction moratoriums may have helped keep many households afloat. The U.S. Centers for Disease Control and Prevention announced a new 60-day eviction moratorium on Tuesday.

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The drop in filings are a continuation of 2020's record-setting lows for new bankruptcies. In January, the government reported that new cases were the lowest they had been since 1986.

The low bankruptcy filings coincide with reports that the U.S. economy strengthened in the second quarter of 2021 as government aid and vaccinations against COVID-19 have fueled consumer spending.

The Central District of California reported 24,635 new personal bankruptcies over the past year, the most of any district in the U.S. The Northern District of Illinois logged the second most with 18,947 new personal filings. The Southern District of Texas reported the most new commercial filings, with 1,531. Delaware was not far behind, reporting 1,462 new commercial cases.

President Joe Biden’s administration issued $1.9 trillion in pandemic relief in March.

Read more:

U.S. CDC announces new 60-day COVID-19 eviction moratorium

Fiscal stimulus, vaccinations lift U.S. economy above pre-pandemic level

U.S. bankruptcy filings hit 35-year low thanks to government pandemic aid

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Reporting by Maria Chutchian

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.