Bankruptcy Data & Statistics

Our Analysis of the Bankruptcy Statistics

As the world continues to grapple with the aftermath of the COVID-19 pandemic, an alarming trend is unfolding in the U.S financial landscape - a significant surge in bankruptcy filings. Over the last week, we saw a 24.57% YOY increase in Chapter 7 filings, a 23.48% YOY increase in Chapter 13 filings, a 103.36% YOY increase in Chapter 11 filings, and a 150.00% YOY increase in Chapter 12 filings. These filings, reflecting the distress faced by businesses and individuals alike, are indicative of the deep economic wounds inflicted by the crisis and the subsequent economic turbulence.

While Chapter 7 cases continue to dominate in sheer numbers, 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 20+ percent 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 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 a 75 percent increase in bankruptcy filings between 2022 and 2024, which could mean a return to pre-pandemic levels. 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 first-quarter 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-4 Analysis of the Bankruptcy Statistics

From the data provided, several trends and observations can be made:

1. General Decreasing Trend from 2021 to 2022: In most weeks, the number of cases filed in 2022 is lower than the corresponding week in 2021. This could indicate an improvement in financial stability among individuals or businesses, or perhaps changes in bankruptcy laws or lending practices.
2. Increasing Trend in 2023: The trend seems to change in 2023. The number of cases filed in each week of 2023 (as far as the data goes) is generally higher than the corresponding week in 2022. This suggests a worsening of financial conditions, more relaxed lending standards, or other factors leading to increased bankruptcies.
3. Seasonal Fluctuations: There appear to be some seasonal trends in the data. For instance, filings tend to spike in late January and late April for all the years. This could be related to the financial stress after the holiday season and the tax filing season in the United States, respectively.
4. Lower Filings in Holiday Weeks: There is a consistent decrease in the number of cases filed during weeks with public holidays. Examples are the week of 2022-07-04, which contains the Independence Day holiday in the US, and the last week of the year, which includes Christmas. This may be due to courts being closed or people being less likely to file during holiday periods.
5. Weekly Variation: There is significant weekly variation in the number of cases. This could be influenced by numerous factors, such as variations in economic conditions, changes in bankruptcy laws, and individual behaviors.

These are broad strokes and interpretations of the data. To create a more detailed or specific interpretation, further analysis or additional data (like economic indicators or policy changes) might be required.

Google Bard Analysis of the Bankruptcy Statistics

Here are several interesting trends and observations from the data:

• The number of bankruptcy filings has been increasing since 2021. This is likely due to a number of factors, including the COVID-19 pandemic, the rising cost of living, and the economic recession.
• The majority of bankruptcy filings are Chapter 7 filings. Chapter 7 filings are liquidation bankruptcies, which means that the debtor's assets are sold to pay off creditors.
• Medical debt is the leading cause of bankruptcy in the US. In 2020, 66.5% of bankruptcies were filed due to medical debt.
• The number of bankruptcy filings is higher in certain states than others. The states with the highest number of bankruptcy filings per capita are Mississippi, Alabama, Georgia, Tennessee, and Arkansas.
• The number of bankruptcy filings is higher among certain demographics than others. The groups with the highest number of bankruptcy filings are people with low incomes, people with less education, and people with disabilities.

It is important to note that these are just a few of the trends and observations that can be made from the data. There are many other factors that can contribute to bankruptcy, and the data does not account for all of them. If you are considering filing for bankruptcy, it is important to speak with an attorney to discuss your options.