Bankruptcy Filings Up 11% in 2025 - Here's What 2026 Could Look Like

This memo will provide you with a nationwide level review of 2025 pertaining to the bankruptcy environment in the United States. As you know, with the current state of the economy, bankruptcy and collection environments continue to present challenges. This affected the way bankruptcy matters were managed. There was an increase in Bankruptcy Filings in 2025, and we expect to see a continued increase in both consumer and commercial filings in 2026. The political environment will have a significant impact on how large that increase will be.

2025 FILING RECAP

Over the past year, the ebb and flow of bankruptcy filings have been an interesting one. Bankruptcy filings in 2025 were 565,759, as compared to 508,953 in 2024, an increase of 11%. That is like the increase from 2023 to 2024. What was different this past year was the increase that we see at the end of the year. Typically, the last quarter is one where we see stagnation in the number of filings. 2025 saw an increase in each month over the previous month’s filings. A deeper dive into the numbers, December 2025 can be a telling sign of what is to come. Total bankruptcy filings during the month were 45,953, up 20% from December 2024. In years past, bankruptcy filings in December tended to have decreased or there was a very small increase in filings from November. Month to month monitoring of filings will become crucial in helping to manage expectations for 2026.

Chapter 7 filings, which include both consumer and business cases, increased by 19% percent in 2025 over 2024.

Chapter 13 consumer cases increased by 15% and Chapter 11 cases increased by 6%.

The increase in Chapter 13 cases was significant when compared to 2024, which probably indicates an increase in the number of foreclosure filings throughout the country. The total number of commercial bankruptcies filings rose from 30,201 in 2024 to 31,810 in 2025. The number of Chapter 11 cases only represented a 1% increase from 2024.

It is important to note that the numbers from 2024, at times, become skewed as some businesses that file bankruptcy have numerous subsidiaries, and each subsidiary is a different entity, and the cases are administratively consolidated. There did not seem to be as many consolidated cases in 2025 as in 2024.

CAUSES OF THE INCREASED FILINGS

What caused the increase in bankruptcies?

The first answer has been the increase in interest rates which have caused variable rate loans, credit card interest rates, and mortgage rates to increase. The rate increases made it more difficult for consumers and businesses to meet their obligations. Although interest rates have been falling due to moves by the Federal Reserve, it still has influenced consumers’ ability to pay their bills.

In addition, prices on certain products have continued to increase. Many reports have indicated that consumers are having a difficult time paying for groceries and other necessities. This has also led consumers to cut back on discretionary spending.

We have seen increases in bankruptcy in several major areas. Healthcare, restaurants, real estate, energy, aviation, and retail entities top the list.

Some of the largest commercial bankruptcies in 2025 include Sunnova Energy, First Brands Group, Omnicare, Spirit Aviation, Genesis Health, Everstream Solutions, New Rite Aid, Prospect Medical Holdings and F21 OpCo.

2026 Forecast

2026 is going to be another year of increased bankruptcy filings. Based on the last 3 months of 2025 and current state of the economy it would not be surprising to see a 20% increase in overall bankruptcy filings. On the commercial side, we expect to see an uptick in bankruptcy filings. This will include both Chapter 7 and Chapter 11 cases.

I think the political climate and Supreme Court rulings will play a major role. May will be a tell-tale month as a new chair of the Federal Reserve is appointed. It would be expected when that occurs there will be a shocking reduction in interest rates. How this will affect the economy and stock market is unknown.

In addition, the ruling on Trump’s Tariffs by the Supreme Court will also influence the price of goods. Now that the Court ruled, we will see rebates, possibly lower prices and additional hires of employees.

As we have stated over the last few years, there will continue to be a supply chain and weather issues that will affect businesses. Early extreme winter weather has affected operations of business, and no one is sure how it will affect crops. Insurance claims will rise and so will the corresponding costs to consumers and businesses.

Lastly, the cost of health insurance for some consumers will skyrocket due to the end of the ACA benefits. Unless Congress acts in some way, consumers will need to choose to pay their bills or obtain health insurance. Besides the negative effect on the consumers, it will also put strains on the health care system.

On the consumer side, we will continue to see fluctuations state by state. The states with non-judicial foreclosures should see a larger increase in bankruptcy filings as default rates continue to rise.

We are seeing across the board high levels of delinquency on credit cards and auto obligations. The repossession rate on automobiles is at one of its highest points. We project that the mortgage and auto lenders will be aggressive with foreclosures and repossessions of vehicles. The resale market of residential real property and autos must be considered. Where we had seen early in 2024 increases in values of homes and cars, that has seemed to tame itself especially with the increase in interest rates.

All these considerations make it difficult to predict filing trends for 2026, but we do believe we will see an increase of approximately 20% in total bankruptcy filings.