Have Both Commercial And Personal Bankruptcies Dropped Since The Pandemic Began In 2020? If So, Why Do You Think That Is?
Personal bankruptcies have dropped dramatically, and are the lowest in decades. Business and commercial bankruptcies have also seen a decline. While the reasons are a little different for each, the overarching theme is government intervention.
When people were laid off as a result of the pandemic, they became eligible for unemployment benefits, including extra federal funding. In California, the state covered medical insurance. California also imposed moratoria on rent and mortgages. Thus, there was no real need to file bankruptcy because creditors were not filing lawsuits. Now that the moratoria and funding programs are coming to an end, people might begin to start filing for bankruptcy protection again.
Businesses received PPP loans and other loans, which were forgiven, if the business qualified. This helped keep many businesses afloat during the pandemic, so they didn’t file for bankruptcy. Now that the government supports are coming to an end, there will probably be an uptick in bankruptcy filings in 2022.
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