Bankruptcy filings down for 2020

TOLEDO — Despite a wide scale economic shutdown that left at last count 324,000 Ohioans unemployed, final bankruptcy numbers for 2020 in the northwest Ohio region show that filings fell 28 percent overall compared to 2019. A total of 2,956 bankruptcy petitions were filed last year, down from 4,111 the previous year. It was believed to be the lowest total since the 1980s. Nationally, bankruptcy filings hit their lowest total — 529,071 — since 1986, according to the American Bankruptcy Institute. According to data from the U.S. Clerk of Courts office, bankruptcy filings were down 31 percent in December with just 177 cases filed. It marked the 10th consecutive month that cases were down in the 21 counties covered by the Toledo court compared to the same month in 2019. Last year there were 2,725 Chapter 7 liquidation cases filed, which was a decrease of 26 percent. Meanwhile, there were 225 Chapter 13 repayment cases filed, which was down 26 percent from a year earlier. There were 164 Chapter 7 cases in December, down 27 percent, and 13 Chapter 13 cases, down 57 percent. Stephen Priestap, a Toledo bankruptcy attorney, said a lot of the decreases can be attributed to the ongoing coronavirus pandemic that led to an economic shutdown and extensive unemployment in Ohio. "I think a lot of it had to do with Covid. It's just sort of a general rule that when people are unemployed they don't have much motivation to file bankruptcy because they're not getting garnished," Priestap said. "I think there's going to be a dam that bursts at some point when people go back to work." Priestap said moratoriums on foreclosures and evictions, plus federal aid programs like the Paycheck Protection Program helped keep some businesses afloat and workers employed. But many workers who kept their jobs had their hours cut and were underemployed and may be forced to bankruptcy later. "So I think there's going to be maybe not a huge tidal wave, but maybe a small tidal wave when people go back to work," the attorney said. Toledo bankruptcy attorney Thom Cafferty, who also is a bankruptcy trustee, said his statistics show that the decline in bankruptcy filings has continued into January. "I'm down about 30 percent this year. So they're still going down," Cafferty said. "There's a lot of unemployment involved, there's underemployment involved. I'm seeing some health care situations where people who've lost their health insurance are incurring large medical bills," he added. Cafferty said even those who are filing bankruptcy are having a difficult time doing so. "I see a good percentage of cases where the petition includes fee waivers. Many of those filers are below 150 percent of the poverty line," he said. "I'd estimate that a good 20 percent of cases filed are cases where people have very insignificant assets," he added. Cafferty said if there's a large wave of bankruptcy petitioners patiently waiting to file this year, they won't do so anytime soon. "In order to get a large wave you'd have to see an increase in foot traffic — and I'm not seeing that," he said. "There's usually a large delay between someone making a phone call in preparation and the actual filing. There is no uptick in consultations or phone calls that I'm seeing." What could unleash a wave is if the new administration of President-elect Joe Biden addresses student loan debt, which is a huge problem, Cafferty said. "Some people may be waiting to do something if there's relief for that on the horizon. But (the new administration) will be under a lot of pressure. They've only got two years of control to get something done," he added. ___ (c)2021 The Blade (Toledo, Ohio) Visit The Blade (Toledo, Ohio) at www.toledoblade.com Distributed by Tribune Content Agency, LLC.