While business bankruptcies may have reached a ten-year low, the over 418,000 consumer filings in 2023 reveal a financial landscape where over half a million Americans each year still face the crushing weight of medical bills, job loss, and insurmountable debt.
Key Takeaways
- In 2023, U.S. bankruptcy courts recorded 418,440 consumer bankruptcy petitions, a 10.5% decrease from 2022
- Chapter 7 liquidations accounted for 64.2% of all individual bankruptcies filed in U.S. courts in 2023, totaling 268,000 cases
- Total business bankruptcy filings in the U.S. dropped to 19,702 in 2023, marking a 10-year low
- Chapter 7 cases in U.S. courts totaled 295,385 in FY 2022, representing 64% of non-business filings
- Chapter 11 filings nationwide were 10,240 in 2023, with small business cases at 2,543
- Chapter 13 petitions filed in 2023 numbered 133,055, down 11.4% from prior year
- Debtors aged 25-34 filed 22.5% of Chapter 7 cases in 2022 U.S. data
- Females represented 56.3% of individual bankruptcy filers in U.S. courts in 2023
- Married couples filed 15.2% of joint petitions in 2022 consumer bankruptcies
- Medical debt cited as primary cause in 66.5% of U.S. bankruptcies per 2019 study of 199,000 cases
- Credit card debt overburden led to 35% of Chapter 7 filings in 2022 ABI survey
- Job loss preceded 44% of personal bankruptcies in U.S. during 2020-2021 pandemic period
- 75% of U.S. bankruptcies result in full discharge of unsecured debts under Chapter 7
- Chapter 11 reorganization success rate stands at 10-15% for large firms, per 20-year study
- Average Chapter 13 plan confirmation rate was 68% in U.S. districts in 2022
Overall U.S. bankruptcy filings decreased in 2023 despite high medical debt driving many consumer cases.
Causes
- Medical debt cited as primary cause in 66.5% of U.S. bankruptcies per 2019 study of 199,000 cases
- Credit card debt overburden led to 35% of Chapter 7 filings in 2022 ABI survey
- Job loss preceded 44% of personal bankruptcies in U.S. during 2020-2021 pandemic period
- Student loan debt contributed to 20% of millennial bankruptcy filings in 2023 data
- Divorce triggered 15-20% of consumer bankruptcies annually in U.S., per long-term studies
- Housing costs exceeded 30% of income in 52% of Chapter 13 filers pre-bankruptcy
- Business failures due to economic downturns caused 28% of corporate Chapter 11s in 2023
- Overleveraging from pandemic loans led to 12% rise in small business bankruptcies in 2023 Q4
- Retail sector bankruptcies spiked 40% due to e-commerce competition in 2022-2023
- In 2023, 48% of global bankruptcies were linked to supply chain disruptions post-COVID
- High interest rates caused 25% increase in European SME insolvencies in 2023 Q3
- Over 60% of UK business failures in 2023 attributed to cash flow issues
- Energy price hikes led to 18% of German insolvencies in retail sector 2022-2023
- Pandemic debt overhang responsible for 30% of Canadian business insolvencies in 2023
- Australian insolvencies saw construction sector at 22% due to labor shortages
- In Japan, aging population contributed to 15% of small business closures via bankruptcy
- Brazilian agribusiness insolvencies up 12% from commodity price volatility in 2023
- Digital transformation failure caused 11% of Indian corporate insolvencies under IBC
Causes Interpretation
The American dream has essentially become a medical bill attached to a credit card, funded by student loans, strained by a divorce, and placed in a house you can't afford after a job loss, while globally, businesses are collapsing under pandemic debt, high interest rates, and supply chain chaos, proving that the only thing more contagious than COVID was its financial aftermath.
Chapter Types
- Chapter 7 cases in U.S. courts totaled 295,385 in FY 2022, representing 64% of non-business filings
- Chapter 11 filings nationwide were 10,240 in 2023, with small business cases at 2,543
- Chapter 13 petitions filed in 2023 numbered 133,055, down 11.4% from prior year
- Subchapter V small business Chapter 11 cases totaled 1,824 in FY 2023, up slightly from 2022
- Chapter 12 family farmer/fisherman filings were only 131 in 2023, a minimal portion of total cases
- In 2022, Chapter 7 dominated with 67.4% of all filings, per ABI data
- Chapter 11 business reorganizations declined 22.3% to 6,569 in calendar 2023
- Consumer Chapter 13 cases fell 12% to 115,000 in 2023
- Total Chapter 11 filings in FY 2022 were 11,532, including 2,398 small business cases
- Chapter 9 municipal bankruptcies were filed only 8 times in 2023
Chapter Types Interpretation
The data paints a picture where the overwhelming majority of financially drowning individuals grab the Chapter 7 life raft for a clean slate, while struggling small businesses bravely, but in dwindling numbers, attempt the arduous Chapter 11 reorganization swim back to shore.
Demographic Breakdown
- Debtors aged 25-34 filed 22.5% of Chapter 7 cases in 2022 U.S. data
- Females represented 56.3% of individual bankruptcy filers in U.S. courts in 2023
- Married couples filed 15.2% of joint petitions in 2022 consumer bankruptcies
- Homeowners comprised 37% of Chapter 13 filers in recent U.S. studies, versus 10% in Chapter 7
- African Americans filed bankruptcy at 3.5 times the rate of whites in U.S. data from 2019
- Median age of bankruptcy filers rose to 43 years in 2022 U.S. filings
- Single males accounted for 28% of individual filers in 2023, per court stats
- Filers with college degrees were 25% more likely to file Chapter 13 over Chapter 7
- In 2022, 41% of filers had dependents under 18, highest in Southern districts
Demographic Breakdown Interpretation
The data paints a portrait of American financial distress where a surprising number of young adults kick off their financial lives in court, women disproportionately bear the household debt burden, and systemic inequality is laid bare as Black families face bankruptcy at more than triple the rate of white ones.
Filing Numbers
- In 2023, U.S. bankruptcy courts recorded 418,440 consumer bankruptcy petitions, a 10.5% decrease from 2022
- Chapter 7 liquidations accounted for 64.2% of all individual bankruptcies filed in U.S. courts in 2023, totaling 268,000 cases
- Total business bankruptcy filings in the U.S. dropped to 19,702 in 2023, marking a 10-year low
- U.S. bankruptcy filings reached 517,308 in fiscal year 2022, including both business and non-business cases
- Non-business filings surged 24.3% year-over-year to 457,701 in the 12 months ending September 2023
- Business Chapter 11 reorganizations fell to 5,407 cases in 2023, down 18% from 2022
- Total U.S. bankruptcy petitions in 2020 spiked to over 550,000 due to COVID-19 economic impacts
- Chapter 13 wage-earner plans comprised 31.8% of consumer filings in 2023, equating to 133,000 cases
- U.S. business filings hit a record low of 19,702 in calendar year 2023
- Bankruptcy filings in the Western District of North Carolina reached 8,749 in 2023, highest among districts
- In EU, insolvency proceedings resolved 62% of cases within 2 years in 2022
Filing Numbers Interpretation
While American households may be breathing a little easier with consumer bankruptcies down, the record low in business filings ironically suggests companies might have just found more creative ways to fail.
Global Bankruptcy Filings
- UK individual insolvencies totaled 103,274 in 2022/23, up 8% from prior year
- Germany saw 17,842 consumer insolvencies in 2022, down 5% amid economic recovery
- Canada reported 140,492 consumer insolvencies in 2022, highest since 2009
- Australia personal insolvency appointments reached 35,747 in 2022/23 fiscal year
- Japan corporate bankruptcies numbered 7,936 in 2023, lowest in decades
- Brazil judicial recoveries filed 1,200 cases in 2023, up 15% YoY
- India saw 1,353 corporate insolvencies resolved under IBC by 2023
- France enterprise receiverships totaled 36,000 in 2022, per Banque de France
Global Bankruptcy Filings Interpretation
The global economic story is one of stark contrasts, with nations like Canada drowning in a sea of overdue bills while Japan sails smoothly with historically few corporate shipwrecks.
Outcomes and Recovery
- 75% of U.S. bankruptcies result in full discharge of unsecured debts under Chapter 7
- Chapter 11 reorganization success rate stands at 10-15% for large firms, per 20-year study
- Average Chapter 13 plan confirmation rate was 68% in U.S. districts in 2022
- Creditors recovered only 35% of claims in median Chapter 7 business liquidation in 2023
- Post-bankruptcy credit scores recover to 640 within 18 months for 60% of filers
- Chapter 11 plans confirmed in 85% of cases under Subchapter V since 2020 enactment
- Dismissal rates for Chapter 13 reached 55% nationally in 2023 due to non-payment
- Bankruptcy filers see 20% income increase on average 2 years post-discharge
- EU recovery rates average 70% for secured creditors in insolvency proceedings
- UK administration success led to 55% business rescues in 2022/23 insolvencies
- Germany insolvency recovery for unsecured claims averaged 4% in 2022 cases
- Canadian consumer proposals resolved 80% of cases without full bankruptcy in 2022
- Australia saw 42% of personal insolvencies discharged within 3 years average
- Japanese bankruptcy proceedings conclude in 6 months on average with 20% recovery
- Brazil IBC recoveries averaged 32% of admitted claims by end-2023
- India resolved 1,353 of 7,000+ IBC cases with 38% average recovery rate
- France judicial liquidations recovered 25% for priority creditors in 2022
Outcomes and Recovery Interpretation
The statistics present a global tapestry of financial reckoning where, in the U.S., Chapter 7 offers a clean slate for most individuals while businesses face grim odds in Chapter 11, yet persistence through Chapter 13 or the new Subchapter V can forge a difficult path to recovery, contrasting sharply with Europe's higher creditor returns and the protracted struggles seen in other major economies.
Sources & References
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- Reference 2PUBHUBpubhub.abi.orgVisit source
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- Reference 4FEDERALRESERVEfederalreserve.govVisit source
- Reference 5AMERICANBARamericanbar.orgVisit source
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- Reference 7PNHPpnhp.orgVisit source
- Reference 8STATISTAstatista.comVisit source
- Reference 9ECec.europa.euVisit source
- Reference 10GOVgov.ukVisit source
- Reference 11DESTATISdestatis.deVisit source
- Reference 12ICic.gc.caVisit source
- Reference 13AFSAafsa.gov.auVisit source
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- Reference 15SERASAEXPERIANserasaexperian.com.brVisit source
- Reference 16IBBIibbi.gov.inVisit source
- Reference 17BANQUE-FRANCEbanque-france.frVisit source
- Reference 18OECDoecd.orgVisit source