The Effect of COVID-19 on Bankruptcy Filing and Mortgage Foreclosure
The year 2020 brought an unprecedented situation to people of the whole world. It not only claimed thousands of lives around the world but also forced all the countries to impose lockdown and social distancing norms. America was no different either. Unemployment increased unprecedentedly while many industries had to stop operating. This brought down GDP by more than 30% in the second quarter of 2020.
However, the data of bankruptcy and mortgages show the opposite picture while around 10 million people deal with the unwanted situation of unemployment and lockdown.
All types of bankruptcy filing have gone down 20% than the last year whole government legislation has staved off foreclosure proceedings at least for now.
While the data will only show a partial picture about bankruptcy cases, in the following points, our Pittsburgh bankruptcy lawyer elaborates the whole predicament in clearer details.Business Bankruptcy is Going Up While Consumer Bankruptcy is Going Down
Even when the economy is suffering from the blow of the pandemic, bankruptcy filing has gone down to 30th September 2020 according to the statistics from the Administrative Office of the U. S. Courts.
While in 2019, the number of bankruptcy case files was 776,674, in 2020, the number of bankruptcy filing gone down to 612,561. In Eastern Pennsylvania, the cases went down by 28%. While there were 8274 cases filed in 2019, this year it is 5,936.
As per the experts and our Pittsburgh bankruptcy lawyer, the cases of bankruptcy filing generally go up after an economic breakdown. After the great recession, the cases increased in 2010. However, the reason this time is probably the disruption in the process of bankruptcy due to the pandemic.
While in other situations, unemployment has been one of the biggest contributory factors for bankruptcy. But this time during the COVID, it is not. In fact, according to the researchers from Harvard University, individuals and small businesses faced different financial experiences during the time of the pandemic.
While larger businesses are filing 200% more for Chapter 11 Bankruptcy, the only reason for the decrease in consumer bankruptcy can be system disruption owing to the pandemic, financial, physical and technical obstacles.Mortgage Foreclosure
Owing to the pandemic, the mortgage market is also not in a good shape. However, homeowners are getting the protection of federal legislation which is why the true situation will be revealed only in the middle of 2021. In March 2020, former President Trump has signed CARES Act or Covid Relief Law that has given some benefits to the homeowners dealing with the mortgage. These two are offering one year of mortgage relief to homeowners in the USA.
The forbearance will start to end in March-April 2021 which will offer a clearer picture of this situation. When the moratorium will be lifted, the mortgage market will be in serious trouble as predicted by the experts as well as different market reports.
It is impossible for anyone to say clearly what is waiting in the future for everyone. However, when the lockdowns will be lifted and the majority of people will be vaccinated for COVID, things will surely change in a positive way. If you are trying to comprehend your situation in this predicament, come to us at Pittsburgh Bankruptcy Law Group. Our Pittsburgh bankruptcy lawyer will help you.