Law Street Media

Q3 Update: August Signals First Year-Over-Year Bankruptcy Increase Since Pandemic

Trading and investment concept trader silhouette with digital tablet and virtual screen with financial chart graphs and candlestick

Concerns about inflation and gas prices have dominated the news in the third quarter of 2022. These economic trends could be behind changes to a years-long trend in bankruptcy petition filings.

For the first time since 2020, the third quarter of 2022 has seen the end of year-over-year decreases in bankruptcy filings, reversing a trend that has persisted throughout the economic upheavals of the COVID-19 pandemic. The quarter saw just under 100,000 bankruptcy filings, as reported by Docket Alarm.

Legal analytics has shown that, month-to-month, bankruptcies spike in March and steadily decrease throughout the year, before spiking again the next March. Additionally, since 2020, every month has seen a decrease in bankruptcy filings compared to the year prior – the spikes in March, for example, have steadily decreased in magnitude. March 2020 saw over 60,000 cases; in 2022, it saw just 37,000.

The downward trend may indicate the success of economic measures like the Payment Protection Program and stimulus checks, accompanied by court and law office closures during pandemic-era lockdown measures. Regardless of the reason, bankruptcy filings remained low despite the massive economic upheaval of the COVID-19 pandemic.

This trend came to an end in the third quarter, over two years after the initial pandemic lockdowns. August 2022 saw 35,370 bankruptcy filings across all chapters, a small increase of about 2,000 over last year’s 33,315, or a 6% jump. September saw a smaller year-over-year increase of about 700 cases.

The year-over-year increase is small, but could be a leading indicator of a changing economic environment. the shift may indicate a changing landscape for debtors, as individuals and corporations increasingly consider filing for bankruptcy in the absence of other remedies.

Exit mobile version