Number of Colorado bankruptcy filings down, for now, amid COVID-19 pandemic
COLORADO SPRINGS, Colo. (KRDO) -- The number of unemployed Coloradans has skyrocketed during the COVID-19 pandemic, but is that having an effect on people filing for bankruptcy?
A KRDO NewsChannel 13 investigation found bankruptcy filings are down quite a bit since the pandemic began.
For Coloradans, this is typically the prime season for bankruptcy filings. Data from the Colorado Federal Courts show the increase in filings around this time in the last nine years. The increase is partially due to the typical IRS tax filing deadline of April 15.
But this year filings are down by about 1,000 compared to the first quarter of previous years.
"I think this is due to the fact that people are basically stuck at home due to the stay-at-home order," Geoffry Atzbach said.
Atzbach has been a bankruptcy attorney in Colorado Springs for 23 years. He tells KRDO his office has seen a 40% decline in people filing for bankruptcy since the coronavirus hit.
"A lot of people their income has dropped substantially," Atzbach said. "So, they're maybe currently having to use a credit card to supplement their basic income to pay for basic expenses such as food or gas for their car."
Currently, many businesses are shut down and have laid off or furloughed workers. Colorado has at least 230,000 workers who have filed for unemployment.
Atzbach believes the number of bankruptcy filings due to the COVID-19 pandemic will be related to how long people are unemployed.
"This has the potential to be sustainably larger than what we saw in 2008 in terms of bankruptcy filings because this is affecting a much broader range of people than the great recession of 2008," Atzbach said.
A year after the 2008 recession, nearly 28,000 Coloradans filed for bankruptcy. That is 61% more filings than in 2019, when just over 11,000 filed in Colorado.
"I think probably at the outer limit, probably 12 months out, we are going to see a huge increase in bankruptcy filings just due to the fallout, really of all of these things that are taking place right now," Atzbach said.
Congress recently amended the bankruptcy code when lawmakers passed the CARES Act. The changes to the code allow those who already filed for Chapter 13 bankruptcy now have an additional two years to pay off their debts.
Atzbach says filing from bankruptcy may not be for everyone. If you are struggling financially, he recommends contacting a bankruptcy attorney.
