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The number of companies and businesses filing for bankruptcy protection soared last year, as a precarious economic climate continued to weigh on both boardrooms and household budgets.
According to new data from bankruptcy information services platform Epiq AACER, cited by the American Bankruptcy Institute (ABI), total filings rose 11 percent to 565,759 in 2025.
Why It Matters
Epiq AACER said the number of businesses and consumers seeking Chapter 11 protection signals mounting “distress” among both groups. The latter has for some time been grappling with elevated debt levels, a slowdown in the labor market and rising prices, while the former has battled interest rate and cost pressures, as well as enduring policy uncertainties stemming in large part from President Donald Trump’s tariffs.
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The issue has been highlighted by a handful of household-name firms that were forced to file for bankruptcy last year. These include Spirit Airlines, the jewelry retailer Claire's and First Brands, the auto parts company whose collapse sparked major concerns about risky lending practices in the U.S.
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What To Know
While lower than pre-pandemic levels and the 757,816 recorded in 2019, last year’s total filings mark a significant increase from 508,953 in 2024 and 445,286 the year prior.
As is typical, consumer bankruptcies represented the lion’s share of filings in 2025, rising 12 percent to 533,949 from 478,752. Consumer Chapter 7 filings—the most common kind used by individuals with unsecured debts and limited income—jumped 15 percent to 332,706 from 288,908.
Chapter 13 filings—which involve repayment plans rather than any wholesale liquidation of assets—were up 6 percent to 200,055 among consumers in 2025.
According to Michael Hunter, vice president of Epiq AACER, 2025’s total figures were boosted by a 21 percent year-over-year jump in December filings, which he said, “signals the momentum we expect to continue into 2026.”
Following a separate report on the number of filings recorded toward the end of 2025, bankruptcy expert Deborah Thorne told Newsweek the trend reflected “economic pressures on those households: job losses, health care costs, and rising everyday costs from groceries to rent.”
“We are experiencing a chaotic economy, and this chaos is negatively affecting Americans,” she added. “For many, that means filing bankruptcy.
Meanwhile commercial filings rose 5 percent to 31,810 in 2025 from 30,201 in 2024. Chapter 11 filings were up 1 percent to 7,940 from 7,893, while filings for the streamlined version of Chapter 11—designed for small businesses—rose 11 percent to 2,446 from 2,202.
What People Are Saying
ABI executive director Amy Quackenboss said: “The increase in bankruptcies reflects the convergence of economic stressors that continue to weigh on consumers and businesses. Elevated borrowing costs, persistent inflation and geopolitical uncertainty have more families and businesses seeking a financial fresh start through bankruptcy.”
Deborah Thorne, professor of sociology at University of Idaho and an expert in consumer bankruptcies, told Newsweek: “Rates of bankruptcy wax and wane throughout history—because economic policies and the general health of the national economy wax and wane. I think any increase is concerning, however.
"Bankruptcy filings are a gauge of how people in this country are doing. So an increase suggests that they are not doing well. And just as important, it is terribly important to the people who are living in financial precarity and just doing their very best to meet their financial obligations.”
What Happens Next
With few indications that geopolitical or economic uncertainties will ease for American consumers or businesses, experts expect 2026 to be marked by similarly elevated levels of filings among both groups.
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