The only section of our economy that behaved normally during 2020 belonged to those who filed under chapter 11, which has always been, and continues to be, for big business reorganization.
New York City was the hardest hit of any American city with, at last count, more than 24,000 deaths linked to the virus. Many New York businesses have shut their doors for good, including, of course, big box retailers — Lord & Taylor mostnotably. Then again, Century 21, which had gone out of business, is now in the process of being rescued.
How did this happen? For one thing, various government measures meant to prop up the economy during the worst of the pandemic, most notably the $2 Trillion “Coronavirus Aid, Relief and Economic Security Act” (CARES Act) merely postponed the inevitable.
Other stimulus funds, and moratoriums against collections, evictions and foreclosures, were also key. Even those in charge of mortgage and car payments tended, under the circumstances, to give their customers the benefit of the doubt. And it’s worth noting that bankruptcy filings only began falling in March, 2020, when courts began to limit public access, in order to stop the spread of Covid-19.
But the debt is still owed, and eventually creditors will start to collect, landlords will start to evict, and banks will start to foreclose.
At that point the increase in personal bankruptcies is likely to be dramatic. Most of those who held off during the pandemic are expected to file, in the end, under chapter 13.
if you have questions about bankruptcy, please contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.