AND JEFF MANNING

The Oregonian

SALEM — The COVID-19 pandemic has brought unprecedented hardship to many Oregonians. And yet the number of Oregon bankruptcies fell by more than 25% last year, according to the American Bankruptcy Institute, to the lowest point in many years.

It’s not just Oregon — the national data reflects a similar decline. In Oregon and around the country, consumer and business bankruptcies were down sharply despite the coronavirus recession.

That counterintuitive result reflects a number of factors, according to bankruptcy attorneys: Federal relief payments insulated many people and many businesses from the worst in the early days of the pandemic. Eviction moratoriums mean that tenants haven’t been obliged to pay the rent, at least not yet, while foreclosure moratoriums reduced the pressure on homeowners. Deferrals in student loan payments gave people time to cover the costs of their education.

Creditors are not aggressively trying collect on the debts because they know some consumers don’t have any the money to pay.

“If there ever was a perfect storm reducing the number of bankruptcy filings, this is it,” said Salem bankruptcy attorney Rex Daines.

The Great Recession produced scores of bankruptcies as businesses and consumers lost access to capital, and as home prices collapsed.

The current recession affects a narrower segment of the economy, which means fewer bankruptcies in total. Expanded employment benefits Congress approved in March blunted the financial crisis for many people, while the federal Paycheck Protection Program provided a temporary lifeline to businesses.

Most of those benefits expired in the fall, ratcheting up pressure on consumers and companies. The economic pain is concentrated especially among relatively low-paid workers in the service sector, who have little financial cushion.

Portland bankruptcy attorney Todd Trierweiler specializes in handling Chapter 7 filings for the poor. He said he has clients in their 30s who have exhausted their savings and often their parents’ savings and are either renting a room for a few hundred dollars a month or have moved back home.

Immigrants who worked in nail salons or restaurants have lost their jobs and don’t have an occupation to return to, he said. As a sign of just how bad things are, he said collections agencies aren’t even bothering to try to collect from many of them.

“They’re sometimes homeless,” Trierweiler said. “They’re effectively judgment proof.”