Bankruptcy filings are continuing to plunge, falling nearly 30% for the 12-month period that ended Sept. 30. But the downward trend could be the calm before the storm.
Personal and business bankruptcy filings totaled 434,540 for Sept. 30, 2020, through Sept. 30, 2021, a 29.1% drop from the 612,561 filed during the previous year, according to data from the U.S. Courts.
In the 7th Circuit, bankruptcy filings reached 46,992 for the year ending Sept. 30, 2021. This is a 31.6% decrease from the 68,656 filed during the year ending Sept. 30, 2020.
Both the Southern and Northern Districts of Indiana recorded declines in bankruptcy filings.
The Southern District totaled 9,196 bankruptcy filings for the 12-month period ending Sept. 30, which is down 19.8% from the 11,465 filings in the previous year.
Likewise, the Northern District recorded a total of 5,865 bankruptcy filings for the year ending Sept. 30. This is a 22.2% decrease from the 7,541 filed during the year ending Sept. 30, 2020.
A trio of academics is predicting that a surge in bankruptcy filings will require more judges.
A paper written in 2020 for the Harvard Business Law Review analyzed what would be needed to handle the bankruptcies caused by the pandemic-induced financial upheaval. To keep the judiciary’s workload from exceeding the level hit in the Great Recession, the professors found in the worst-case scenario that the bankruptcy system would need as many as 246 temporary judges, while in the best-case scenario the system would still need 50 more temporary judges.