Maine’s bankruptcy filings are now at their lowest level in decades.

Maine is on track to hit new bankruptcy records in at least two decades by 2022, which is surprising to lawyers and experts who believe the epidemic will increase due to economic pressures.

Legal filings — which individuals and businesses file to begin the process of obtaining protection from creditors — are considered a key indicator of economic health. From January to November, the United States Bankruptcy Court reported all 496 cases filed for the District of Maine. In the same period last year, there was a total of 601.

For all of 2021, there were 654 bankruptcy filings. The oldest data available from the American Bankruptcy Institute indicates that since at least 2000, the number of filings in the state was below 1,000 in the first year.

Less than half of Maine’s 1,358 records in 2019 could expire this year.

The drop reflects a national trend. Other federal courts reported in October that personal and business filings were down 12 percent from last year’s total.

These positive economic signs come even as the economic crisis worsens.

Government programs that helped many people during the pandemic, such as emergency rental assistance, have ended. So have eviction and seizure restrictions. Courts have put debt collection lawsuits on hold to focus on urgent criminal and family matters, but those cases are moving forward again.

Portland attorney J. “I think we’ve all had a pause, and it’s important for people to understand whether it’s a pause or it’s over,” said Scott Logan, whose practice focuses on bankruptcy and debt relief services.

“It’s a little mysterious.”

Long-term change or temporary?

Bankruptcy filings in Maine began to decline after reaching a peak of 4,205 in 2010. No one seems entirely sure why such a drop occurred in the United States after the Great Recession of 2008-09.

More recently, as COVID-19 has crippled economies worldwide, emergency government aid has caused businesses to float and go bankrupt.

The aid took many forms: Payroll Protection Plan loans to help people stay in work, $600 more in weekly unemployment benefits for people who lost their jobs, emergency rental assistance and forbearance on mortgage payments to help people stay in their homes. There were bans on student loans, stimulus checks that helped people improve their monthly cash flow and put money in their pockets.

Sharon Huntley, a spokeswoman for the Maine Department of Administrative and Financial Services, said: “Foreclosure filings have decreased significantly during the pandemic due to increased federal and state funding. “This relief may have allowed for some financial cushion, so records have not seen a reversal.”

But those programs were targeted and temporary, and they have ended or will eventually.

“If economic conditions deteriorate next year, losses may begin to increase again,” Huntley warned.

“Those things did exactly what they were supposed to do,” said Jeffrey Piampiano, an attorney at Drummond Woodsum in Portland and a trustee in certain bankruptcy cases. Now that they’re gone, I think there’s a concern that that pillow is saving the people from the need for bankruptcy.

Nate Hall, an attorney at Verrill in Portland and another bankruptcy trustee in Maine, believes another reason for the low filings is a hot housing market. For investors in financial trouble, selling a home at value offers a ready source of cash, a way to pay off debt, and an alternative to bankruptcy.

“The huge increase in house prices has allowed both people who defaulted on their mortgages to sell their property and pay off their obligations and maybe have some cash,” he said.

Now, banks and lenders are calling in delinquent debts and collection lawsuits continue. At the same time, October data from the Federal Reserve showed that revolving credit balances (the kind carried on credit cards) increased more than 10% from a year ago.

For Hull, the unemployment rate is another indicator to watch. A low unemployment rate means that people who quit or lose their jobs can often return to work sooner, preventing debt and bankruptcy.

“With a healthy job market, I don’t expect to see much of an increase, but if the job market goes bad, we’re going to see a lot of people filing for bankruptcy,” he said.

Logan said he’s concerned that some people are ignoring the “funds” that were thrown on the streets during the outbreak. It’s tempting to see the decline in documentation as a positive indicator for the environment, but he cautioned against that approach.

“I don’t believe this is true,” he said. I think that people are not paying attention to their financial situation and are just ignoring the problem that is not going away and is getting bigger.

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