Commercial Bankruptcies Surge 78% in July
- Staff Writer
- Aug 8, 2025
- 2 min read
July 2025 was a striking month for the U.S. economy, not because of a single market shock, but because of the cumulative signals emerging from the bankruptcy courts. Commercial and consumer bankruptcies are not just ticking up, they’re surging, according to data from Epiq AACER, the leading provider of U.S. bankruptcy filing data.
Commercial Chapter 11 Bankruptcies Up 78%
The most eye-catching figure: Commercial Chapter 11 filings jumped to 911 in July, marking a 78% year-over-year increase from 512 filings in July 2024. That’s not a marginal uptick — it’s a resurgence of distress among businesses large enough to seek formal reorganization protections.
And it wasn’t just year-over-year. Compared to June 2025, Chapter 11 filings were up 46%, showing the momentum isn’t just seasonal or anecdotal, it’s escalating.
“We continue to see strong demand from both consumers and businesses seeking bankruptcy protection... Overall volumes are steadily climbing back toward pre-pandemic levels,” said Michael Hunter, VP at Epiq AACER.
Small Businesses Aren’t Immune
Many business lenders and MCA funders operate under the assumption that small businesses, especially those qualifying under Subchapter V, are less prone to complex bankruptcies. That assumption needs an update.
Subchapter V filings (tailored for small businesses) reached 206 in July 2025, up 30% from 159 a year earlier.
However, that’s slightly down 2% from June’s 211 filings, suggesting a month-to-month fluctuation — but still within a higher-risk zone.
Subchapter V is often used by the types of companies that rely on alternative financing, including revenue-based funders and fintech lenders. With volumes climbing, underwriters need to pay closer attention to early warning signs like declining cash flow, industry volatility, or management changes.
Consumer Bankruptcies Also Rising
The broader economic pressure isn’t just hitting businesses, it’s affecting households too:
Total U.S. bankruptcy filings in July: 49,614, up 12% year-over-year.
Consumer (noncommercial) filings: 46,617, up 11% from 42,081.
Chapter 7 filings: 29,122, up 13% year-over-year.
Chapter 13 filings: 17,392, up 7%.
This confirms what many in the credit markets already suspected: households are increasingly unable to keep up with elevated interest rates, high inflation, and record household debt.
What This Means
These are not just statistics; they are risk indicators. The surge in bankruptcies reflects the cumulative impact of macroeconomic headwinds:
High interest rates make both business and consumer debt harder to manage.
Inflation and borrowing costs continue to erode financial resilience.
Household delinquencies and small business defaults are climbing quietly but steadily.
For several quarters, the narrative has been about recovery. Now, the conversation is shifting toward resilience and recalibration. The July data shows we are entering a phase where more borrowers, from mom-and-pop shops to middle-market firms, may need financial lifelines or risk default.
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