June 4th, 2021
MAY INSIGHT REPORT
According to the latest AIS Insight Report, May bankruptcy filings totaled 34,770. This reflects a 14% decrease from the previous month and a 13% decrease compared to the same month last year (Figure 1). Our analysis reveals that bankruptcy filings reached the lowest monthly total for May in over 20 years (Figure 2).
Before we get into the complete analysis, we'd like to note that the report continues to confirm that 2021 is an unusual year, and we are still observing significant trend deviations (Figure 3). In fact, May 2021 marks one of three anomalies over the course of 20 years.
Our data shows that in May 2006 total filings amounted to 49,142 (Figure 2). This variance can be tied back to the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Since the imminent change in the bankruptcy laws was known amongst both the bar and the public, many sought to file before the new law went into effect. Thus, accelerating their decision to file bankruptcy and leading to a substantial increase in filings in 2005. And, in addition, leaving many who could have previously filed unable to seek protection.
As for the other two anomalies, May 2020 and May 2021 reported total filings of 39,980 and 34,767, respectively (Figure 2). This fluctuation from historical trends can be traced back to the COVID-19 pandemic, court closures, and relief programs. Once courts opened back up, the relief programs assisted Americans in the form of stimulus and protections.
Foreclosure protections and mortgage relief programs are due to expire by June 30, 2021. In addition, half of the states in the U.S. have announced plans to end their participation in federal supplemental unemployment benefits in either June or July, ahead of the program expiring in early September. According to Ms. Vanden Houten of Oxford Economics, around 3.7 million people stand to lose some form of benefits as of right now. Many experts believe that these additional benefits are among many reasons for discouraging those to seek new jobs.
We will continue to report additional information as it is available. Until then, please continue to read below for an in-depth analysis for the month of May 2021.
Our analysis of Chapter 7 and Chapter 13 bankruptcies reveals that numbers continue to drop below historical averages (Figure 4). Chapter 7 filings totaled 25,966, marking a 16% decrease compared to April 2021 and a 15% decrease from May 2020 (Figure 4). However, these numbers are consistent with the total number of filings recorded between November 2020 and February 2021. Chapter 13 filings totaled 8,467, making a 9% decrease compared to April 2021 and a 0.1% decrease from May 2020 (Figure 4). Over the past 20 years, total Chapter 13 filings only dipped under 9,000 three times: May 2021, May 2020 and November 2005.
For the month of May 2021, Chapter 11 filings totaled 307 (Figure 7). When compared to April 2021, we observed an 11% decrease (Figure 7). However, when comparing Chapter 11s to May 2020, we observed a 59% decrease (Figures 7 & 8). Chapter 11, Subchapter V bankruptcies also witnessed a decline in filings totaling 115 (Figure 7). This reveals an 18% decrease compared to last month and a 5% increase compared to the previous year (Figure 7 & 9).
The highest percentage of bankruptcies for May 2021 came from the South (East) (26%), followed by North Central (East) (21%), Pacific (15%), South (West) (13%), Northeast (12%), Mountain (7%) and North Central (West) (6%) regions of the country (Figure 10).