Why are more Americans filing for bankruptcy? New report paints a worrying picture.
Individual and bankruptcy filings have been on the up towards a return to pre-COVID levels.
Jan. 16 2026, Published 3:58 a.m. ET
The number of Americans filing for bankruptcy has been on the rise for years now. Some would argue that rising prices and an uncertain economy are the biggest reasons for this trend. They wouldn't be entirely wrong, but some experts believe that it is a return to normalcy. It’s not just people; the country has also seen a rising trend in commercial bankruptcies, with several businesses failing to stay afloat in 2025.
According to a report in CBS News, bankruptcy filings jumped 12% from 478,752 in 2024 to 533,949 in 2025, according to Epiq AACER, the platform that provides U.S. bankruptcy filing data. Epiq also tracks Chapter 7, Chapter 11, and Chapter 13 filings. It relies on the data provided through the U.S. Courts' PACER system. So, it’s safe to say that the numbers presented in the report are as accurate as it gets. Commercial bankruptcy filings were up by 5% from 2024 to 2025, as per the data as well.
The report also shared a couple of graphs, one of which represented individual bankruptcy filings and one that represented commercial bankruptcy filings. In both cases, there is an upward trend since 2022. That was towards the end of the COVID pandemic. It showed that bankruptcy filings went down during the pandemic years and are going back up again. Some experts argued that the current trend signified a return to pre-pandemic levels of bankruptcy, which would signify a return to normalcy.
According to Michael Hunter, vice president of Epiq AACER, bankruptcies went down during COVID thanks to an injection of government funds that helped cash-strapped businesses and American households. Now, with those funds not being disbursed any longer, it only makes sense that bankruptcies would go up. "We're just slowly coming back to pre-COVID levels," Hunter said. "Is it a huge event? No. Is it a big increase from what we've experienced over the past five years? Yes."
He is not the only one who feels this way. John Rao, a senior attorney with the National Consumer Law Center, believes that the trend in bankruptcies will only go up in the near future. "There's a good chance that filings will even be higher through this year and even into next year," he said. Rao also believes that Americans hold off on filing for bankruptcy for as long as possible, which means that economic conditions don’t always immediately translate to bankruptcy filings.
"There is often a lag before economic conditions translate to higher bankruptcies," he said. However, Rao also believes that other factors, such as rising cost of medical insurance, mounting credit card debt, and the restart of student loan repayments, have made things a lot harder for millions. "There comes a point where the mounting bills, the increasing balances on credit cards, all those things just weigh people down so much," he explained.
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