What's Driving the Spike in Bankruptcy Filings Among Americans?

According to recent statistics, a growing number of Americans are resorting to bankruptcy—a sign of a troubled economy leaving many without financial stability.

Data from Epiq AACER, a repository of bankruptcy information, reveals a 12% increase in consumer bankruptcy filings, rising from 478,752 in 2024 to 533,949 in 2025. This data, sourced from the U.S. Courts' PACER database, includes figures from Chapters 7, 11, and 13 of the Bankruptcy Code.

Experts note that this increase coincides with ongoing economic challenges. From persistent inflation to increased borrowing expenses, such pressures are affecting both individuals and companies, according to experts.

John Rao, an experienced attorney at the National Consumer Law Center, states that many people delay bankruptcy as long as possible. Consequently, the current economic difficulties might not directly translate to immediate bankruptcy elevations.

"There's typically a delay before economic factors cause a rise in bankruptcy cases," he commented.

Nevertheless, the steep costs of medical insurance, growing credit card balances, and inflation are significant contributors to rising bankruptcy cases. Inflation, in particular, strains people as they try to manage debt and daily expenses.

"Eventually, the burden of accumulated bills and increasing credit card balances is too heavy for many," Rao explained.

A survey unveiled that a majority of Americans are finding it difficult to meet fundamental living expenses—covering necessities such as healthcare, groceries, and housing.

Filing for bankruptcy can provide a financial restart for many, halting debt collectors and potentially erasing some or all of their liabilities. However, it can also significantly damage credit scores, delay home buying, and make future loan approvals more challenging.

Rise in Business Bankruptcies

Business bankruptcies are also ticking upwards, with a 5% increase recorded from 2024 to 2025, according to Epiq AACER. In 2025, companies like Forever 21 and Joann Fabrics struggled to survive despite previously seeking bankruptcy relief.

Chapter 11 filings, allowing companies to reorganize finances, climbed by 1% from 2024 to 2025, influenced by hikes in interest rates and inflation during 2023 and 2024, explained Christopher Ward from Polsinelli Law Firm.

A notable filing involved Saks Global, reported on a Wednesday, where the parent company of Saks Fifth Avenue and others has secured funds to sustain store operations during bankruptcy processing.

Return to Pre-COVID Bankruptcy Patterns

Analysts highlight that the current uptick in both personal and commercial bankruptcies is essentially a return toward pre-pandemic levels.

During COVID, a surge of government aid helped keep businesses and individuals financially afloat, with mortgage and loan forbearances providing additional support, according to Michael Hunter from Epiq AACER.

However, as these temporary support measures were phased out, there has been a noticeable rise in bankruptcy filings, with an increase starting in 2022.

"We are gradually returning to the levels seen before COVID," Hunter remarked. "Is this an extraordinary situation? Not really, but it marks a significant rise compared to the past five years."

Although bankruptcy figures remain below their pre-pandemic peak, they are projected to rise further, according to Rao.

"We could see an even higher number of filings later this year and into the next," he added.