Bankruptcy filings in Chattanooga plunge during COVID-19 pandemic

Government relief measures, foreclosure restrictions limit number of people going broke

Staff file photo / The U.S. Bankruptcy Court building on East 11th Street is shown on Friday, Jan. 11, 2019, in downtown Chattanooga, Tenn.

The number of Chattanoogans going broke has dropped this year to the lowest level in more than a quarter century as federal stimulus measures have helped prop up most financially distressed borrowers through the coronavirus pandemic.

Bankruptcy filings in Chattanooga during the first half of 2021 were down nearly 35% from last year's level and were barely a third of the rate of bankruptcies filed during the previous recession in 2009-2010. Despite the economic slowdown last year triggered by the spread of COVID-19 and the subsequent shut down of much of the economy, borrowers generally stayed afloat with the aid of government relief payments, extra jobless benefits, business loans and grants and limits on foreclosures.

"Many financially distressed businesses and households have been able to weather the economic effects of the pandemic to this point through stabilization efforts by the federal government, lender forbearance and continued low-interest rates," said Amy Quackenboss, executive director for the American Bankruptcy Institute.