Individual filings increased by 12 percent annually, while Chapter 7 filings rose by 15 percent and Chapter 13 filings by 6 percent. Chapter 7 is a liquidation bankruptcy in which assets are sold to pay off creditors, while Chapter 13 is a reorganization bankruptcy in which a person makes monthly payments for a period of three to five years until creditors are fully paid.
“Year over year, we observed double‑digit growth in bankruptcy filings, and December’s results highlight a sharp acceleration as volumes continue to normalize toward pre‑pandemic levels and a return to more typical economic pressures,” said Michael Hunter, vice president of bankruptcy data provider Epiq AACER.
In December 2025, individual filings rose by 21 percent on a yearly basis, which “signals the momentum we expect to continue into 2026 as consumers and businesses in distress seek bankruptcy for protection,” he added.
Commercial bankruptcies saw total filings rise by 5 percent in 2025 compared with the previous year, with Chapter 11 filings increasing by a modest 1 percent. Within Chapter 11, small business subchapter V filings jumped 11 percent.
Under Chapter 11 bankruptcy, a company is allowed to remain open while restructuring its obligations and eventually becoming solvent.
American Bankruptcy Institute Executive Director Amy Quackenboss said the increase in bankruptcies reflected the “convergence of economic stressors that continue to weigh on consumers and businesses.”
“Elevated borrowing costs, persistent inflation and geopolitical uncertainty have more families and businesses seeking a financial fresh start through bankruptcy.”
In Novembe 2025r, there were four corporate defaults in the United States, the lowest since February. In contrast, Europe saw its corporate defaults jump to three from two in October, it said.
The four defaults in the United States were made by cleaning and sanitation service company Packers Holding LLC, consumer fashion accessories maker Fossil Group Inc., polyurethane foam products company FXI Holdings Inc., and energy infrastructure company New Fortress Energy Inc.
“S&P Global Ratings expects the U.S. trailing 12-month speculative-grade corporate default rate to ease to 4.0% by September 2026, down from 4.6% in September 2025. Resilient earnings and gradually improving financing conditions should support the decline,” the report said.
“Our optimistic scenario projects a decline to about 3.0%, while our pessimistic case anticipates an increase to about 5.5% if trade tensions re-emerge, policy uncertainty increase, or financing conditions tighten and renew pressure on weaker issuers.”
While the board’s consumer confidence index fell 3.8 points in December, expectations for families’ future financial situations climbed to their most positive level since January, it said. Consumers also became more optimistic about stock prices, with inflation expectations pulling back.
Meanwhile, the Small Business Administration has taken steps to address lingering concerns among business owners.
Small Business Administration Administrator Kelly Loeffler said the previous administration’s policies raised inflation, driven partly by massive bureaucracy.
“Through our Deregulation Strike Force, SBA is leveraging its unique authority to deregulate across the federal government and cut senseless red tape that drove up costs for small businesses and consumers,” she said.
“Our efforts will add to President Trump’s ongoing work to cut prices, from energy to food to housing, by delivering meaningful relief on Main Street.”
