San Fernando Valley Chapter 13 Bankruptcy Cases Spike in October 2021

What happened

Last month, San Fernando Valley Chapter 13 bankruptcy filings increased in Oct 2021 to almost double what they were just two months earlier. During the COVID pandemic, bankruptcy filings are down everywhere. This impact is not just San Fernando Valley bankruptcy cases, but all over the Central District of California, and around the nation. For example, let’s look at summer 2021. June, July and August averaged sixteen Chapter 13 bankruptcy cases filed each month. That number is way down compared to a pre-pandemic total of 51 new San Fernando Valley chapter 13 cases. That’s the total from August 2019, representing a drop of almost 70%.

However, in October, the number more than doubled. Last month saw a total of 37 Valley chapter 13 bankruptcy filings at the Woodland Hills bankruptcy court. That figure is more than double the average of 16 per month from the summer. In fact, so far in 2021, only two months had exceeded 22. So, the 37 October Chapter 13s were by far the biggest month of the year in the Valley.

Why Valley bankruptcy cases are increasing

Now, the reason why the filings increased by so much is a different question, and opens things up for speculation. Part of it is the easing of protections for consumer debtors. For example, California foreclosures are increasing now that some mortgage forbearance programs are ending.  Chapter 13 bankruptcy is very effective in stopping foreclosure, and allowing you a chance to catch up on late mortgage payments.

Additionally, it seems that Los Angeles Superior Court is operating effectively again. This means that credit cards and collection companies are free to slap with lawsuits those consumers who are late on making their credit card payments.  Also, on September 30th, a California eviction moratorium ended (though residents in Los Angeles County have extended protections).

Are other divisions seeing the same increase in Chapter 13 filings

Other divisions in the Central District of California are seeing an increase of Chapter 13 bankruptcy cases, but not to the same degree as Valley Chapter 13 filings. For example, the Los Angeles division in CDCA saw 119 October Chapter 13 cases, over a summer average of about 90 a month. Santa Barbara actually saw a drop in Chapter 13 cases in Oct 2021, as did Riverside. The only division even close to the San Fernando Valley Chapter 13 bankruptcy increase was Santa Ana. The Orange County bankruptcy court went from an average of about nineteen Chapter 13s a month this summer to 36 filings in October.

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