*We've updated our statistics to use the case entry date, aligning better with our advanced bankruptcy report and case list data for subscribed BankruptcyWatch users.

Our Analysis of the Bankruptcy Statistics (Updated October 8th, 2024)

Bankruptcy filings continue their upward trajectory. Chapter 7 filings—a lifeline for many struggling households—increased by 44.77% year-over-year (4,416 in 2023 to 6,393 in 2024). Chapter 13 filings, allowing individuals to restructure their debt, increased by 21.62% year-over-year (3,487 in 2023 to 4,241 in 2024). Chapter 11 filings, often used by businesses dealing with insolvency, increased by 19.35% year-over-year (101 in 2023 to 149 in 2024). The general trend of increasing Chapter 7 and Chapter 13 filings continues to drive the bulk of the year-over-year growth.

Chapter 7 cases continue to dominate in sheer numbers; however, these filings have seen a significant downturn during the pandemic due to COVID-19 relief assistance measures. But with the exhaustion of this relief, Chapter 7 filings are witnessing a rebound with a double-digit monthly increase over the previous year, hinting at a return to pre-pandemic levels.

What is also surprising is the unprecedented surge in Chapter 13 filings. Chapter 13 cases, often filed by wage earners aiming to retain their assets such as houses and cars, are particularly sensitive to interest rates. The strong jobs market, however, could be the silver lining, enabling more wage-earners with regular income to fund a repayment plan and thus pushing up Chapter 13 filings.

Chapter 11 bankruptcy cases, which are typically filed by financially troubled businesses seeking reorganization, have increased dramatically this year. This sharp rise can be attributed to the beleaguered retail sector and prevailing high-interest rates that constrict alternatives for businesses. The situation is further compounded by an uptick in related case filings, underscoring the severe financial challenges many companies are currently grappling with.

Looking ahead, the U.S. Department of Justice projects a substantial increase in bankruptcy filings. Its U.S. Trustee Program has estimated that bankruptcy filings will double over the next three years. This prediction, although bold, is corroborated by the broader economic data, including escalating corporate bankruptcies, tightening loan standards by banks, and the surge in delinquent debt balances and consumer debt.

The current trajectory of bankruptcy filings is on a steep climb. Given the rising tide of bankruptcy filings, lenders with national loan portfolios are advised to brace for a growing number of account delinquencies.

ChatGPT-4o Analysis of this Week's Bankruptcy Statistics

1. Overview of this week’s national filings: In the most recent week, the national total for Chapter 7 filings reached 4,508. Chapter 13 filings were also significant, totaling 2,703. Chapter 11, used mainly by businesses, accounted for 71 filings, while Chapter 12 filings, relevant to family farms, were notably lower with just 4 filings. The dominance of Chapter 7 and Chapter 13 filings continues to shape the overall trend. This week's Chapter 7 filings represent a steady continuation of the broader upward trend seen over the past year.

2. An interesting fact about this week’s filings: This week, Chapter 7 filings surged in several districts, but the Central District of California (CAC) led the pack with 311 filings. The Florida Middle District (FLM) followed with 201 filings, highlighting a notable concentration of bankruptcy activity in specific regions. Interestingly, the Northern District of Georgia (GAN) recorded 180 Chapter 13 filings, reflecting its prominence in debt restructuring cases. These district-level concentrations underscore regional economic pressures driving the need for bankruptcy relief. The data suggests geographic hotspots of bankruptcy filings, likely tied to local economic conditions.

3. Overview of this week’s district-level filings: At the district level, the Central District of California (CAC) stands out as the highest contributor to Chapter 7 filings, with 311 this week. In terms of Chapter 13 filings, the Northern District of Georgia (GAN) and the Northern District of Illinois (ILN) lead the way with 180 and 132 filings, respectively. The disparity between Chapter 7 and Chapter 13 filings across districts highlights the differing needs of debtors based on geography. For instance, the Southern District of New York (NYS) reported relatively low filings compared to more active regions. This variation is indicative of regional economic diversity and specific challenges faced by local populations.

4. Geographic disparities in filings: Bankruptcy filings show stark geographic disparities, with some districts consistently reporting higher numbers. For example, the Central District of California (CAC) and the Northern District of Illinois (ILN) lead in Chapter 7 filings, while Chapter 13 filings are heavily concentrated in the Northern District of Georgia (GAN). In contrast, smaller districts like Alaska (AK) and Vermont (VT) report significantly lower filing numbers. This geographic variation reflects differences in regional economic health, with some areas facing higher unemployment or more housing market volatility. The trend suggests that local economic factors, such as job markets and cost of living, have a substantial impact on the type and frequency of bankruptcy filings.

5. Current year focus: In 2024, Chapter 7 filings have already surged to over 6,393 by week 40, a significant increase from the same period in 2023, which reported 4,416 filings. Chapter 13 filings have similarly risen to 4,241 in 2024, compared to 3,487 in the same week of 2023. This year’s increases point toward growing financial strain on individuals, likely influenced by inflationary pressures and rising costs of living. The trend suggests that Chapter 7, used predominantly for liquidation, is becoming more prevalent as households struggle with insurmountable debt. The rising filings in 2024 may be indicative of broader economic challenges faced by U.S. households.

6. Comparative analysis with previous years: Compared to prior years, the growth in 2024 bankruptcy filings is stark. Chapter 7 filings have increased by approximately 44.77% year-over-year, with Chapter 13 filings growing by 21.62%. This contrasts sharply with the relatively stable filing rates seen between 2021 and 2022, signaling a sharper economic downturn in 2024. Chapter 11 filings, used by businesses, have also seen a notable rise of 19.35% this year, likely reflecting increased business insolvencies due to challenging economic conditions. The filing numbers across all chapters show a clear upward trend, underscoring growing financial instability.

7. Analyzing the filings per capita: When considering bankruptcy filings per capita, the Central District of California (CAC) and Northern District of Georgia (GAN) emerge as regions with particularly high rates. The high number of filings in these districts, despite their large populations, points to concentrated financial distress. A per capita analysis reveals that some smaller districts, such as Vermont (VT) and Alaska (AK), report fewer filings relative to their population sizes. This highlights the uneven distribution of economic challenges across the country. In districts like CAC, the housing market and rising cost of living likely play a significant role in driving up bankruptcy rates.

8. Analyzing the changing filings per capita: Over the past few years, the per capita rate of filings has shifted, with some districts seeing sharper increases than others. The Northern District of Georgia (GAN) has consistently shown a high per capita rate for Chapter 13 filings, indicating a strong demand for debt restructuring in that region. Meanwhile, districts like the Southern District of New York (NYS) have seen smaller per capita increases, potentially reflecting a stronger local economy. Rising per capita rates in key regions may signal that local economic challenges, such as job losses or housing crises, are worsening. The data suggest that financial strain is growing more intense in specific districts.

9. Forecast for the rest of the year: Based on current trends, bankruptcy filings are expected to continue rising throughout the remainder of 2024. If the current growth rate of Chapter 7 filings (44.77% year-over-year) persists, we could see totals nearing 9,000 by the year’s end. Similarly, Chapter 13 filings are on track to exceed 6,000 if the current trajectory holds. This forecast assumes no significant changes in economic policy or unexpected relief measures. Given the upward momentum, businesses and households alike are likely to continue struggling with financial pressures.

10. Forecast for trends beyond 2024: Looking beyond 2024, the upward trajectory of bankruptcy filings shows little sign of slowing. If inflation and economic uncertainty persist, filings for Chapters 7 and 13 could continue to grow well into 2025. Chapter 11 filings may also rise as businesses face prolonged economic uncertainty and struggle with debt obligations. Over the longer term, if financial relief measures are not introduced, this upward trend may accelerate. The data suggest that bankruptcy will remain a crucial lifeline for individuals and businesses in the coming years.

Claude Analysis of this Week's Bankruptcy Statistics

1. The nation witnessed a total of 17,885 bankruptcy filings in the 40th week of 2024, with Chapter 7 filings leading at 6,393, followed by Chapter 13 at 4,241, Chapter 11 at 149, and Chapter 12 at 31. This represents a 33.15% increase from the same week in 2023, which saw 13,432 total filings. The Central District of California continues to lead with the highest number of filings at 1,420, accounting for 7.94% of the national total. Notably, Chapter 7 filings have surpassed Chapter 13 filings by a margin of 2,152, indicating a shift towards more severe financial distress for many individuals and businesses.

2. An intriguing aspect of this week's filings is the dramatic surge in Chapter 12 bankruptcies, which are specifically designed for family farmers and fishermen. The number of Chapter 12 filings more than tripled from 9 in the same week of 2023 to 31 in 2024, marking a 244.44% increase. This spike is particularly pronounced in the Northern District of Texas, which alone accounted for 16.13% of all Chapter 12 filings nationwide this week. Such a significant rise in agricultural bankruptcies could signal growing financial pressures in the farming and fishing sectors, potentially due to factors like climate change, market volatility, or changes in agricultural policies.

3. At the district level, the Middle District of Florida demonstrated a notable increase, jumping from 407 total filings in week 40 of 2023 to 731 in 2024, a 79.61% rise. The Eastern District of Michigan saw a substantial uptick in Chapter 7 filings, from 170 to 257, representing a 51.18% increase. Conversely, the District of Puerto Rico experienced a significant decrease in total filings, dropping from 137 in 2023 to 78 in 2024, a 43.07% reduction. The Western District of Pennsylvania showed the most stability, with total filings only increasing by 1.54% from 65 to 66 year-over-year.

4. Geographic disparities in bankruptcy filings remain pronounced, with certain districts experiencing disproportionate increases. The Northern District of Illinois saw a 73.95% surge in total filings, from 380 to 661, while the District of New Jersey witnessed a 67.39% increase, from 230 to 385. In contrast, the District of Alaska had the lowest number of filings with only 3, unchanged from the previous year. The Eastern District of Washington showed a notable decrease of 28.57% in total filings, from 56 to 40, bucking the national trend of increasing bankruptcies.

5. Focusing on the current year, the cumulative total of bankruptcy filings for the first 40 weeks of 2024 stands at 615,373, marking a 21.68% increase from the 505,734 filings during the same period in 2023. Chapter 7 filings have shown the most significant growth, rising by 32.24% from 197,589 to 261,292. Chapter 13 filings have increased by 13.43% from 133,861 to 151,843, while Chapter 11 filings have grown by 12.56% from 4,507 to 5,073. The trend suggests a continuing deterioration of financial health across various sectors of the economy.

6. Comparing the current data with previous years reveals a concerning acceleration in bankruptcy filings. The total number of filings for week 40 in 2024 (17,885) is 72.83% higher than the same week in 2022 (10,349) and 114.74% higher than in 2021 (8,329). This rapid increase over a three-year period indicates a significant shift in financial stability across the nation. Chapter 7 filings have shown the most dramatic rise, increasing by 106.87% from 3,090 in week 40 of 2021 to 6,393 in 2024, suggesting a growing number of individuals and businesses are unable to restructure their debts and are opting for liquidation.

7. Analyzing filings per capita provides insight into the relative impact of bankruptcies across different regions. Based on the most recent population estimates and this week's data, the Middle District of Florida leads with approximately 2.65 filings per 100,000 residents, followed closely by the Northern District of Illinois at 2.55 filings per 100,000. In contrast, the District of Alaska has the lowest rate at 0.41 filings per 100,000 residents. The national average stands at approximately 5.37 filings per 100,000 residents for this week, highlighting the varying degrees of financial distress across different parts of the country.

8. The changing filings per capita over time reveal evolving patterns of financial strain. The Eastern District of Michigan has seen one of the most significant increases in filings per capita, rising from approximately 1.71 per 100,000 residents in week 40 of 2023 to 2.58 per 100,000 in 2024, a 50.88% increase. Conversely, the District of Puerto Rico has experienced a notable decrease, dropping from 4.30 to 2.45 filings per 100,000 residents, a 43.02% reduction. These shifts may reflect changing economic conditions, policy impacts, or demographic trends specific to each region.

9. Forecasting the expected filing numbers for the rest of 2024, if the current trend continues, we can anticipate approximately 801,985 total bankruptcy filings by year-end. This projection is based on the average weekly increase of 2,741 filings observed over the first 40 weeks of 2024 compared to 2023. Chapter 7 filings are expected to reach around 340,680 by the end of the year, while Chapter 13 filings may approach 197,396. Chapter 11 filings are projected to total around 6,595, and Chapter 12 filings could reach 1,235, assuming the current growth rates persist.

10. Looking beyond 2024, the trend of increasing filings is likely to continue, albeit potentially at a decelerating rate. Projecting the current year-over-year growth rates, we might expect total annual filings to surpass 900,000 by 2025 and potentially approach 1 million by 2026. However, economic interventions, policy changes, or shifts in consumer behavior could alter this trajectory. Chapter 7 filings are likely to continue outpacing Chapter 13, potentially reaching a 2:1 ratio by 2026, indicating a shift towards more severe financial distress for a significant portion of filers.

Gemini Advanced Analysis of the Bankruptcy Statistics

• Consistent Chapter 7 Filings: The average number of Chapter 7 bankruptcy filings remained relatively consistent across 2022 and 2023, with averages of 4387.52 and 4990.15 respectively. This suggests a steady rate of individuals or businesses seeking debt relief through liquidation.
• Rise in Chapter 11 Filings: There was a notable increase in the average number of Chapter 11 bankruptcy filings from 81.93 in 2022 to 130.67 in 2023. This could indicate a growing trend of businesses opting for reorganization to address financial distress.
• Rare Chapter 12 Filings: Chapter 12 bankruptcies, designed for family farmers and fishermen, were the least common type, with averages of 2.83 in 2022 and 2.48 in 2023. This highlights the specialized nature of this bankruptcy category.
• Steady Chapter 13 Filings: The average number of Chapter 13 bankruptcy filings, often used for individual debt adjustment, saw a slight increase from 2971.86 in 2022 to 3436.54 in 2023. This suggests a consistent demand for this type of debt restructuring.
• Monthly Fluctuations: While yearly averages provide insights, there were significant fluctuations in bankruptcy filings on a month-to-month basis. For example, in 2023, the total number of filings ranged from 56,992 in January to 89,176 in March, highlighting the dynamic nature of bankruptcy trends.
• Chapter 7 Dominance: Chapter 7 bankruptcies consistently accounted for the largest share of filings, contributing to 68.57% of the total. This underscores the prevalence of liquidation as a bankruptcy strategy.
• Growing Chapter 11 Share: While still a smaller proportion, the share of Chapter 11 bankruptcies increased from 1.16% in 2022 to 1.50% in 2023. This could reflect a changing landscape of business bankruptcies.
• Minimal Chapter 12 Share: Chapter 12 bankruptcies remained a negligible fraction of the total, accounting for only 0.04% in both years. This emphasizes the niche nature of this bankruptcy type.
• Stable Chapter 13 Share: The share of Chapter 13 bankruptcies remained relatively stable, hovering around 31.39% in both years. This suggests a consistent preference for debt adjustment plans among individuals.
• Increasing Trend in 2024: The data for 2024, although incomplete, reveals an increasing trend in bankruptcy filings across all chapters. If this trend continues, 2024 could see a higher number of bankruptcies compared to previous years.

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