Even though bankruptcy filings were down in Los Angeles County in 2020, financial experts expect to see a surge of bankruptcy filings in the next few years. The coronavirus pandemic and related shutdowns have forced many families and businesses into economic peril. Nonetheless, the number of national bankruptcies filed in 2020 was the lowest it has been since 1986. The number of bankruptcies filed last year was nearly 30% lower than those filed in 2019. 

Experts Expect Bankruptcies to Increase

One of the reasons bankruptcy filings may have been abnormally low in 2020 relates to the federal courts’ shutdown. During the beginning of the pandemic, many federal courts were closed for several months. Filing for bankruptcy is a complex legal process, and sometimes the number of bankruptcies increases well after a financial dip occurs. For example, the Great Recession started in 2007, but we did not see bankruptcy filings hit their high until 2010. We may begin seeing a surge in bankruptcy filings in 2022 and 2023. In financial downturns, businesses can try to survive for six to eight months or even up to a year before they end up needing to file for bankruptcy. 

  • In Los Angeles County, 19,186 people and businesses filed for bankruptcy in 2019. In 2020, there were only 14,180 total bankruptcies filed. 
  • In 2020, Los Angeles County saw 13,323 business filings for individuals. 
  • In Los Angeles County, there were 11,300 for non-business Chapter 7 bankruptcy filings in 2020 and 1,962 chapter 13 bankruptcy filings.

Even though only 4% of all bankruptcies filed in 2020 were from businesses, business bankruptcy filings significantly impact the overall economy. When business files for bankruptcy, employee layoffs and other cutbacks often occur. Many chain restaurants that have filed for bankruptcy have closed multiple locations. 

Are You Considering Filing for Bankruptcy in Los Angeles?

Are you one of the many individuals or businesses considering filing for bankruptcy in 2021? Perhaps you have been able to survive financially for the last tumultuous year, but now you are finding it more difficult, if not impossible, to pay your debts. We understand that filing for bankruptcy can be an intimidating process. However, it is worth taking the time to speak to a Los Angeles bankruptcy lawyer before you take any other action, such as working with a debt consolidation company. Debt consolidation companies and high-interest loans may seem like a less intimidating option, but they could have more negative consequences in the future.

Contact a Los Angeles Bankruptcy Lawyer Today

Dealing with financial stress can be extremely difficult. Whether you are an individual or business, filing for bankruptcy could give you the fresh financial start you and your family need. Contact the Los Angeles-based Bankruptcy Law Center today to schedule an initial consultation with one of our experienced lawyers. We will review your case and advise you of your best path forward.