Personal Bankruptcy Filings Surge 12% as Consumer Strain Mounts

More than 500,000 Americans filed for personal bankruptcy in 2025, a nearly 50% increase from 2022. The pace accelerated in 2026. June filings jumped 12% from a year earlier, according to federal court data.

The rise reflects deepening financial stress. Household income growth has not kept up with inflation. Credit card interest rates have climbed sharply. Those trends are pushing more consumers to seek bankruptcy protection, said Jay L. Zagorsky, a Boston University business school professor who has researched bankruptcy for decades.

Bankruptcy filings had fallen for more than a decade before this upturn. Annual filings hit a low of about 368,000 in 2022, down from 1.5 million in 2010. Stimulus checks and expanded unemployment during the pandemic kept many households afloat. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act also made filing harder by introducing income limits for Chapter 7 eligibility, requiring credit counseling, and mandating a financial management course after filing.

But the decline reversed as pandemic-era support faded. By 2025, filings had crossed 500,000. Zagorsky noted that the current trajectory points to further increases if labor market weakness persists.

Most filers use Chapter 7, a liquidation process that sells non-exempt assets and wipes out most unsecured debts. About two-thirds of filers choose this route. Higher-income debtors with debts under $2.75 million are steered into Chapter 13, which sets up a three-to-five-year repayment plan from future earnings.