Bankruptcy attorneys say that a long-anticipated wave of bankruptcies is now in shoreline’s view, and even with a vaccine in sight, they expect a tsunami of filings in the first and second quarter of 2021 and beyond.

Total bankruptcy filings were actually down 28 percent during the first three quarters of 2020, due to an even steeper decline in personal bankruptcy filings, which make up the bulk of all bankruptcies. Filings dropped from 580,625 in 2019 to 420,048 this year, according to the American Bankruptcy Institute.

But Chapter 11 bankruptcies by businesses with more than $1 million in assets who want to reorganize are up to their highest level since 2010, according to a report from Polsinelli, a bankruptcy law firm with offices throughout the country. And the ABI reported that all Chapter 11 bankruptcies increased by more than a third the first three quarters of 2019, to 5,529.

“I anticipate that there will be an increase in bankruptcies, but the question everyone has is, exactly when?” said Jody Bedenbaugh, a bankruptcy attorney with Nelson Mullins in Columbia, South Carolina.

The idea behind a Chapter 11, of course, is that the company comes out the other side in good health, and so an orderly bankruptcy can often actually be a success story. Bedenbaugh gave the example of a hospital in North Carolina that he represented as it filed for Chapter 11 in March, just before the pandemic shut the state down. Since then, it’s found a buyer and a new operator and stayed in business. (Somewhat paradoxically, the health care industry was hit hard by COVID, which caused many other procedures to be postponed. Dozens of hospitals across the country have filed for bankruptcy this year, and Bedenbaugh said he expects that many will consolidate their operations going into 2021.)

Christine Myatt, a creditor’s attorney with Nexsen Pruet in Greensboro, North Carolina, said that bankruptcy can offer distressed companies a variety of types of relief, from reducing the amount owed to creditors to extending payment terms or modifying interest rates to extricating themselves from leases or contracts that have become financial burdens. They can also help buy a company time to get back on track and preserve the value of the company’s assets.

And by coincidence, in 2019 Congress approved the Small Business Reform Act, which created a new Subchapter V to Chapter 11, making it easier and less expensive for small businesses to reorganize, Myatt said. Under the CARES Act, which Congress approved at the beginning of the pandemic, the maximum debt level to qualify as a Subchapter V debtor was increased from $2.7 million to $7.5 million.

Still, bankruptcies are the sort of success story most companies would prefer to avoid, and bankruptcy attorneys in the Carolinas are concerned that now that government stimulus packages such as the Paycheck Protection Program have run out, smaller businesses will flood the courts with filings in the coming months. The stimulus programs gave people a rope to hang on to, but not a light at the end of the tunnel.

At the same time, banks, which have so far been largely understanding during the pandemic, are likely to become less forgiving in granting forbearances. As a last resort, some businesses have turned to high-interest loans from alternative lenders who aren’t as forgiving as traditional lenders, and those payments are coming due, said Bill Janvier, a bankruptcy attorney in Raleigh who represents debtors.

Overall, the restaurant, retail, hotel, and health care sectors have fared the worst. Yelp, a popular business information website, reports that 163,735 U.S. businesses it lists have closed since the beginning of the pandemic, while Harvard University’s Track the Recovery Project estimates that more than 21 percent of South Carolina’s small businesses have shuttered since January.

While it might seem obvious that the hotel industry is suffering because people aren’t taking vacations, there’s much more to it than that, said Brian Darer, a bankruptcy attorney with Parker Poe in Raleigh who represents creditors.

“I don’t think the average person appreciates the amount of money that goes into business travel, between flights and hotels and restaurants,” Darer said. “You are not allowed to go to a conference to go see a customer, and that has had such a massive impact on the hospitality industry. A hotel makes more money on Monday through Thursday business travel than it does on vacations.”

Some types of businesses have boomed during the pandemic, of course. Even so, Myatt predicts the southeast will see a “blowup” of bankruptcies beginning in 2021.

In the meantime, COVID-19 has impacted bankruptcy attorneys in various ways and brings uncertainty on the outlook of how a blowup of bankruptcies might affect their practices and the courts. Right now, however, consumer attorneys are fairly busy, but not swamped, Myatt said, while business bankruptcy work has slowed down, with the exception of state energy, retailer and landlord-tenant cases.

Regardless, even with a vaccine on the way, it’s not likely to come soon enough to save many small businesses and homeowners from bankruptcy, attorneys said. Some businesses, meanwhile, may find life more difficult even in a post-COVID world. Darer said that he recently sat in on a bankruptcy teleconference in which an expert said that the U.S. could expect up to 80,000 bankruptcies in the coming months.

In the meantime, Travis Sasser, a bankruptcy attorney in Cary, North Carolina, expects many who have filed bankruptcy will extend their reorganization plans for up to two years.

“Forbearances and deferrals bought many small businesses six to eight months,” Sasser said. “The question is whether the prospect of a vaccine will allow people to hang on until it materializes.”