Despite numerous pandemic-related shocks to Whatcom’s economy, bankruptcy filings in 2021 hit an all-time high.
Last year, 155 bankruptcies from all chapters were filed in Whatcom County, according to data from the US Bankruptcy Court Western District of Washington in Seattle. That’s down 25% from the 2020 total and 47% from the pre-pandemic period of 2019. This decline in filings for Whatcom County follows state and national trends over the past two years.
Last year’s total was Whatcom County’s lowest since 2005 major changes to bankruptcy rules. The peak year was 2010, when 808 bankruptcy filings were recorded.
With so much disruption in the job market, especially with pandemic-related shutdowns and restrictions, how have bankruptcy filings been avoided? It looks like federal stimulus money, eviction moratoriums and freezing things like student loans have helped, said Hart Hodges, co-director of the Economic and Business Research Center at Western Washington University.
Other factors also played a role. Interest rates remained low, helping those who had debt or needed a loan. The pandemic also eliminated some temptations that could lead to overspending: While people may have splurged online with a bread machine purchase, they weren’t spending money on more expensive extras like destination vacations or dining out as often.
This drop in additional spending shows up in the data, said James McCafferty, also co-director of Western’s research center. According to Federal Reserve Economic Data. The corporate sector also reacted in the same way, with a sharp decline in commercial loans.
With so many federal aid programs, moratoriums and freezes ending, bankruptcies are expected to rise again in 2022, Hodges said in an email. The odds increase if economic activity remains a bit bumpy with inflation and rising interest rates.