Total bankruptcy filings fell more than 40% in January 2021 compared to last year, according to data provided to the American Bankruptcy Institute by Epiq. Total filings in January 2021 were 32,298 representing a 44% decrease from the January 2020 filing total of 58,160.

The 2,035 commercial filings in January 2021 were 43% less than the 3,560 registered in January 2020. Commercial chapter 11 filings in January 2021 totaled 479, a 24% drop from the 631 commercial chapter 11 filings in January 2020.

“Continued government relief programs, moratoriums and lender deferments have helped families and businesses offset the challenges of elevated unemployment rates and growing debt loads during the COVID-19 pandemic,” ABI Executive Director Amy Quackenboss said. “As further stabilization efforts are considered by Congress, an extension of the eligibility limit for small businesses electing to file for subchapter V under chapter 11 will provide vulnerable businesses with a proven shield in financially uncertain times.”

The Small Business Reorganization Act of 2019 (SBRA), in effect as of February 19, 2020, was enacted to provide Main Street business debtors with a more streamlined path for restructuring their debts. In response to the economic distress caused by the COVID-19 coronavirus pandemic, the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act; P.L. 116-136) was enacted on March 27, 2020, increasing the eligibility limit for small businesses looking to file under SBRA’s subchapter V from $2,725,625 of debt to $7,500,000. The threshold will return to $2,725,625 on March 27, 2021.

Commercial chapter 11 filings in January 2021 represented a 22% increase from the 394 filings recorded in December 2020. Total filings for January decreased 6% compared to the 34,341 total filings in December 2020. Total noncommercial filings for January also decreased 6% from the December 2020 noncommercial filing total of 32,144.  January’s commercial filing total represented a 7% decrease from the December 2020 commercial filing total of 2,197.