COVID relief efforts help keep Tucson bankruptcy filings down in 2021

The number of bankruptcies filed in Tucson and across Arizona fell for the second year in a row in 2021, reflecting a nationwide trend as pandemic relief measures helped keep businesses and consumers afloat.

Statewide last year compared with 2020, bankruptcy filings of all types fell 27.5%, to 9,353, while filings in Tucson dropped 23.7%, to 2,228, according to the U.S. Bankruptcy Court’s Arizona district.

Filings in the Phoenix area dropped 29%, while filings in the court’s Yuma office fell 22.7%, the court said.

Nationwide, total bankruptcy filings during 2021 decreased 24% from 2020, according to the American Bankruptcy Institute, a nonprofit group of bankruptcy professionals based in Alexandria, Virginia.

The decrease in 2021 filings reflected the government relief programs, moratoriums, lender deferments and low interest rates intended to help families and businesses survive the COVID-19 pandemic, said American Bankruptcy Institute Executive Director Amy Quackenboss said.

But 2022 could be a different story, she said.

“Consumers and businesses are now facing the new year with less government relief, fewer lender deferments, rising inflation, worker shortages and supply chain challenges as the pandemic continues,” Quackenboss said.

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In Arizona, Chapter 11 bankruptcy filings — mainly used by businesses to protect them from legal action while they work out a plan to repay creditors — fell about 38% last year statewide and more than 40% in Phoenix.

Tucson saw an increase to eight Chapter 11 cases from seven in 2020, after falling from 23 filings in 2019.

Business-related Chapter 11 filings in the Tucson district last year included Crestwood Hospitality LLC, owner of the Holiday Inn Express & Suites at Tucson Mall, which has filed a reorganization plan and continues to operate the hotel; a skylight installation contractor; and two doctors.

Chapter 7 bankruptcy filings, under which a debtor’s assets are liquidated to repay creditors, fell nearly 27% statewide, dropping more than 22% in Tucson and about 29% in Phoenix.

Chapter 13 bankruptcy filings, which allow individual debtors to reorganize their debts under a repayment plan, fell 27% statewide and about 22% in the Tucson district.

After peaking in 2010 in the wake of the Great Recession, bankruptcy filings across Arizona fell steadily until 2017, when overall filings rose 4% statewide. Statewide filings rose about 3% in 2018 and 2019 before plunging more than 20% in 2020.