*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 December 6th, 2023)

Bankruptcy filings continue on an upward trajectory. Chapter 7 filings—a lifeline for many struggling households—increased by 25.33% year-over-year (4,990 in 2022 to 6,254 in 2023). Chapter 13 filings, allowing individuals to restructure their debt, also saw a notable rise, climbing 13.28% year-over-year (3,703 in 2022 to 4,389 in 2023). Chapter 11 filings, often used by businesses dealing with insolvency, decreased by 9.30% year-over-year (75 in 2022 to 82 in 2023), inflated by the separately filed petitions of WeWork Inc. and its 516 affiliate companies. The ongoing increase in 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-4 Analysis of the Bankruptcy Statistics

The data provides the number of bankruptcy cases filed each week over three years: 2021, 2022, and part of 2023. Based on the data, we can observe the following trends:

Year-to-Year Comparisons

1. Decline from 2021 to 2022: The data generally shows a decline in the number of cases filed each week from 2021 to 2022. For example, the week of January 3rd had 6,160 cases in 2021 but 4,984 in 2022. However, there are some weeks, like the week of February 28, where cases in 2022 (8,333) surpassed those in 2021 (7,673).
2. Increase from 2022 to 2023: There's an increase in the number of cases filed each week from 2022 to 2023 for the data available so far. For instance, the week of January 3rd had 4,984 cases in 2022 and increased to 5,140 cases in 2023.

Seasonal Trends

1. January Spike: There's a noticeable spike in the number of cases in January for each year, possibly due to the financial stress from the holiday season or the start of a new fiscal year.
2. February Drop: There is a drop in the number of cases in early February, followed by another increase.
3. Late April & May Surge: There appears to be a surge in the number of cases in late April and May for each year, which might be tax-related.
4. Summer Variability: During the summer months, there is variability but generally higher numbers compared to the start of the year, particularly in 2023.
5. September Decline: There seems to be a decline in cases in early September, possibly due to seasonality (end of summer, back to school, etc.).

Special Observations

1. Significant Increase in 2023: In 2023, the number of cases filed has increased significantly in some weeks. For example, the week of August 29 had 11,452 cases, a substantial increase from 9,490 in 2022 and 8,504 in 2021.

Summary

• Bankruptcy cases dropped from 2021 to 2022 but increased in 2023 based on the available data.
• Seasonal trends are apparent, such as spikes in January and late April to May, and declines in early September.
• The numbers for 2023 indicate a substantial increase in cases for certain weeks compared to previous years.

Such trends can be indicative of the financial health of individuals or businesses and may be influenced by a variety of factors such as economic conditions, legislative changes, or societal events like pandemics. Further analysis would be needed to determine the causes behind these trends.

Google Bard Analysis of the Bankruptcy Statistics

The bankruptcy data provided shows the number of bankruptcy cases filed in 2021, 2022, and 2023, broken down by week.

Overall Trends

• The total number of bankruptcy cases filed in 2023 is higher than in 2021 and 2022.
• The number of bankruptcy cases filed has been increasing steadily since the beginning of 2023.
• There is a seasonal pattern to bankruptcy filings, with higher numbers of cases filed in the spring and fall.

Year-over-Year Comparisons

• In 2023, the number of bankruptcy cases filed is up 13% compared to 2022.
• In 2022, the number of bankruptcy cases filed was down 5% compared to 2021.

Month-over-Month Comparisons

• In August 2023, the number of bankruptcy cases filed was up 19% compared to July 2023.
• In July 2023, the number of bankruptcy cases filed was up 11% compared to June 2023.

Possible Explanations for the Increase in Bankruptcy Filings

There are a number of possible explanations for the increase in bankruptcy filings in 2023. These include:

• The rising cost of living, which is making it difficult for people to afford their basic expenses.
• The ongoing COVID-19 pandemic, which has caused job losses and financial hardship for many people.
• The war in Ukraine, which has led to higher energy and food prices, as well as supply chain disruptions.

Conclusion

The increase in bankruptcy filings in 2023 is a concerning trend. It suggests that more and more people are struggling financially and unable to make ends meet. This is a complex issue with no easy solutions, but it is important to understand the root causes of the problem in order to develop effective solutions.

What We Are Reading

Want to know about the news articles that caught our eye this week? Start here.

• TransUnion Q3 Quarterly Credit Insights Report: Serious bankcard delinquencies have reached their highest levels since the Great Recession.
• How affordability woes could sink subprime borrowers: Amid inflation and rising interest rates, U.S. borrowers face affordability challenges, causing auto lenders to close eye on borrowers’ ability — and willingness — to make their car payments.
• Overdue commercial property loans hit 10-year high at US banks: Commercial real estate loan delinquencies have reached a ten-year peak, with escalating missed payments and potential value loss on repossessed properties.
• Is the US Facing a Debt Storm? Business Insider shares five charts to show why they say "yes."
• Car Prices Might Be Unsustainable for Buyers: Seasonalized rates of severe delinquency for auto loans are the highest since at least 2006.
• Big Banks are Betting on AI: An ongoing conversation is happening about whether smaller lenders will struggle to keep up as banking becomes an "AI-first" industry.
• Subprime Auto ABS Performance Deterioration Likely with Downturn: Fitch Ratings reports that subprime auto ABS loans face potential recessionary risks, but structural safeguards offer protection to senior noteholders.