The number of bankruptcies filed in 2020 hit a 26-year low, a counterintuitive statistic given the negative financial impact of the national coronavirus pandemic, Reuters reports.

In a report from Epiq AACER, a firm that tracks data related to bankruptcies, the number of bankruptcies filed in US courts numbered just over 526,000, compared to an average of 800,000 in recent years.  Chapter 11 bankruptcies, which are used to large corporations to reorganize debt while continuing to operate, increased by 29% in 2020 to 7,128, compared to 5,158 in 2019.

Economists credit the rapid deployment of federal financial aid to reducing the number of personal bankruptcies filed during the early stages of the pandemic.  In comparison, during the Great Recession, the US saw 2.4 million bankruptcies in 2010 when there was no substantive financial assistance to individuals and families, although there was significant help for businesses. 

Federal unemployment subsidies, aid aimed at small businesses, and rent/mortgage relief programs have played a large part in the financial stability of many small businesses and families by replacing lost income.

The latter part of 2021, however, may see an increase in personal and small business bankruptcies as the recently-passed $900 billion aid program passed by Congress expires.  Epiq AACER Senior Vice President Chris Kruse noted that families and businesses will then have deferred debts come due unless plans are made to extend credit and provide stability to lenders and those owed back payments.