For the second straight quarter, bankruptcy filings have grown by at least 10%, and this marked eight straight quarterly increases after years of consistent declines. Overall, personal and business bankruptcy filings increased by 16.2% in the 12-month period ending June 30, 2024, compared to the previous year, according to data released by the Administrative Office of the U.S. Courts.
By the Numbers: The total number of bankruptcy filings reached 486,613 in the year ending June 2024, up from 418,724 in the prior year. Notably, business filings saw a substantial 40.3% increase, rising from 15,724 to 22,060 cases. Non-business filings also grew, albeit at a slightly lower rate, increasing by 15.3% to 464,553 cases compared to 403,000 in the previous year.
Context: For more than a decade, bankruptcy filings had been on a steady decline, dropping from nearly 1.6 million in September 2010 to a low of 380,634 in June 2022. However, since then, total filings have been on an upward trend each quarter, though they remain far below historical highs.
The Breakdown: The types of bankruptcy filings also reveal interesting trends. Chapter 7 filings, often involving liquidation, totaled 284,975 in 2024, while Chapter 11, typically used for reorganization, recorded 8,717 filings. Additionally, Chapter 12, tailored for family farmers and fishermen, had 181 cases, and Chapter 13, allowing individuals to repay debt over time, saw 192,421 filings.
Why It Matters: The rise in bankruptcy filings highlights the financial challenges faced by both individuals and businesses in the current economic climate. The rise in personal filings suggests growing financial distress among consumers.
