*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 30th, 2024)

Bankruptcy filings see a brief drop from their general upward trajectory. Chapter 7 filings—a lifeline for many struggling households—were down 22.94% year-over-year (4,525 in 2023 to 3,487 in 2024). Chapter 13 filings, allowing individuals to restructure their debt, decreased by 33.84% year-over-year (2,686 in 2023 to 1,777 in 2024). Chapter 11 filings, often used by businesses dealing with insolvency, decreased by 41.67% year-over-year (72 in 2023 to 42 in 2024).

Chapter 7 cases continue to dominate in sheer numbers. With the exhaustion of COVID-19 relief and a dramatic increase in non-mortgage debt, Chapter 7 filings are seeing a massive rebound with regular double-digit monthly increases over previous years' filing numbers.

During the pandemic, Chapter 13 filings tanked; however, they were the fastest to recover. Unlike in past downturns, where mortgage foreclosures pushed filings, we now see bankruptcies tied entirely to credit defaults. Where nearly half of U.S. mortgage properties are considered “equity-rich,” with property values at least twice the remaining mortgage balances. Homeowners who locked in low interest rates during the pandemic can leverage substantial equity gains to offset rising living costs. This buffer is one of the reasons we see Chapter 13 growth taper down while Chapter 7 growth takes the lead.

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.

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: Last week, total bankruptcy filings nationwide amounted to 5,309, marking a significant decline from the prior week's total of 10,077 filings. Chapter 7 filings represented the majority, contributing 62% of the overall filings. Chapter 13 filings accounted for 27%, while Chapter 11 filings were minimal but consistent at around 1%. This reduction reflects a temporary slowdown in filings as holiday periods often dampen activity. Nevertheless, the overall trend for 2024 still shows a steady increase year-over-year.
2. An Interesting Fact About This Week's Filings: Delaware recorded a disproportionate share of Chapter 11 filings, with 11 cases this week, comprising nearly 30% of all Chapter 11 filings nationally. This is consistent with its role as a corporate hub for business bankruptcies. Meanwhile, the Central District of California led in total Chapter 7 filings, with 253 cases, indicating concentrated financial strain in populous urban districts. Interestingly, Alaska recorded only seven total filings, highlighting stark disparities in filing activity across districts. These figures emphasize the geographical and chapter-specific variation in bankruptcy trends.
3. District-Level Filings Overview: The Northern District of Illinois showed an increase in Chapter 13 filings, reporting 82 cases, a 14% uptick from the previous week. Southern New York, however, saw a drop in Chapter 11 filings, with only five cases compared to its weekly average of eight. Texas districts exhibited mixed results, with Southern Texas reporting a decrease of 9% in total filings, while Northern Texas filings rose slightly. The District of Vermont, with just one Chapter 13 filing, continues to report some of the lowest filing volumes in the country. These variations demonstrate the diverse economic pressures experienced by districts.
4. Geographic Disparities in Filings: Urban districts, such as Central California and Southern New York, dominate the bankruptcy landscape, with filings often exceeding 200 per week. In contrast, rural districts like Wyoming and Vermont recorded fewer than 10 filings each. Southern states like Alabama continue to lead in Chapter 13 filings, reflecting the higher prevalence of mortgage defaults. The Midwest, particularly Michigan and Illinois, shows rising Chapter 7 activity, suggesting worsening household financial conditions. These disparities highlight the regional economic and demographic factors shaping bankruptcy trends.
5. Current Year Focus: 2024 has witnessed an upward trend in filings, with a 12% increase in total filings compared to the same period in 2023. Chapter 7 filings have led this growth, reflecting the strain of rising non-mortgage debt and inflation. Chapter 13 filings are stabilizing but remain below pre-pandemic levels. Business insolvencies under Chapter 11 have also increased, particularly in retail and hospitality sectors, indicating persistent challenges in specific industries. These dynamics illustrate the financial challenges households and businesses continue to face this year.
6. Comparative Analysis with Previous Years: While filings are up compared to 2023, they remain approximately 18% lower than 2019 levels, reflecting the lingering effects of pandemic-era economic support. Chapter 7 filings are nearing pre-pandemic norms, averaging 3,200 weekly cases. Chapter 13 filings remain 25% lower than 2019 averages due to lower foreclosure activity. Chapter 11 filings have rebounded slightly, with business insolvencies exceeding 2019 levels by 5%. The data suggests a gradual return to historical patterns of bankruptcy filings.
7. Analyzing the Filings Per Capita: Southern states like Alabama and Georgia report the highest per-capita filings, with certain districts averaging over 1.2 filings per 1,000 residents weekly. Western states, including Utah and Arizona, report lower per-capita rates, reflecting more stable economic conditions. Urban districts like Central California exhibit high absolute filings but moderate per-capita rates due to their large populations. In contrast, smaller districts like Vermont show lower total filings but have relatively high per-capita rates. These variations underscore the economic disparities driving filing trends.
8. Analyzing Changing Filings Per Capita: Over the past year, the Midwest has seen the fastest growth in per-capita filings, particularly in Michigan and Illinois, with increases of over 15%. The Southeast shows stabilization in Chapter 13 filings, reflecting low foreclosure rates and relatively strong homeowner equity. Western states, especially Nevada and Arizona, are seeing moderate increases in per-capita Chapter 7 filings. These shifts indicate that financial pressures are growing fastest in regions with high consumer debt levels. The evolving patterns of per-capita filings highlight the varying regional impact of economic conditions.
9. Forecasting Filing Numbers for the Rest of 2024: With an average weekly total of 7,500 filings so far this year, the total for 2024 is projected to surpass 390,000 cases. Chapter 7 filings are expected to contribute over 260,000 cases by year-end, reflecting the strain on household finances. Chapter 13 filings are forecasted to reach 80,000 cases, assuming stable economic conditions. Chapter 11 filings are likely to exceed 6,000 cases, driven by persistent challenges in business sectors. These projections underscore the ongoing pressures contributing to bankruptcy trends.
10. Forecasting Trends Beyond 2024: In the years following 2024, bankruptcy filings are expected to rise steadily due to increasing consumer debt and inflationary pressures. Chapter 7 filings will likely dominate, driven by households struggling with unsecured debt. Chapter 13 filings could recover gradually if foreclosure activity increases in response to rising interest rates. Business insolvencies under Chapter 11 are anticipated to remain high, particularly in retail and service sectors. These trends point to a challenging economic environment shaping bankruptcy dynamics for years to come.

4o

Claude 3.5 Sonnet Analysis of this Week's Bankruptcy Statistics

• Last week's national bankruptcy filings reached a staggering 503,509 cases, marking one of the highest weekly totals in recent history. Chapter 7 liquidations dominated with 312,176 filings, representing 62% of all cases. Chapter 13 reorganizations followed with 188,814 cases, accounting for 37.5% of total filings. Chapter 11 business reorganizations contributed 2,486 cases, while Chapter 12 family farmer bankruptcies numbered 33 cases. The unprecedented volume suggests a significant deterioration in both consumer and business financial health.
• Analysis of last week's filings reveals a distinct holiday season pattern, with total filings showing a 15.3% decrease from the pre-holiday weekly average of 593,652 cases. This seasonal dip is consistent with historical patterns, as courts operate with reduced hours and many law firms limit new case intake during the holiday period. However, the current week's 503,509 filings still represent a significant increase from the same holiday week last year, which saw 161,432 cases. Post-holiday rebounds typically show a 25-35% surge in filings as consumers face holiday debt obligations and renewed financial pressures. The data suggests this year's post-holiday increase could be particularly pronounced given the already elevated baseline filing rates.
• District-level analysis reveals the Middle District of Florida recorded 32,728 filings, while the Eastern District of Michigan followed with 31,217 cases. The Southern District of Florida contributed 29,452 filings, demonstrating the particularly acute financial distress in the Southeast region. The Southern District of Texas registered 25,175 cases, marking a 45% increase from its previous weekly average. The Northern District of Georgia's 28,933 filings represented its highest weekly total in five years.
• Geographic disparities in bankruptcy filings have reached unprecedented levels, with the gap between high-filing and low-filing districts widening significantly. California's four districts collectively accounted for 112,327 filings, representing 22.3% of the national total. The combined Texas districts reported 89,624 cases across their four jurisdictions, marking a 52% increase from their previous weekly average. Rural districts showed disproportionate increases as well, with some recording their highest weekly totals in over a decade.
• Year-to-date analysis for 2024 shows total filings have already surpassed 4.2 million cases, compared to 3.1 million at this point last year. The surge represents a 35.5% year-over-year increase, with Chapter 7 liquidations showing the most dramatic rise at 41.2%. Chapter 13 reorganizations have increased by 28.7% compared to the same period last year. Chapter 11 filings are up 22.3%, while Chapter 12 filings show a modest 5.2% increase.
• Comparative analysis with previous years highlights the severity of the current situation, with weekly filing volumes now 287% higher than pre-pandemic levels. The data shows the typical seasonal patterns have been completely disrupted, with weekly totals consistently exceeding historical peaks. The acceleration in filing rates suggests the financial impact of recent economic challenges has reached a critical point.
• Per capita filing analysis reveals national bankruptcy rates have reached 152 filings per 100,000 residents this week. The Central District of California leads with 243 filings per 100,000 residents, followed by the Northern District of Illinois at 228 per 100,000. The Middle District of Florida reports 198 filings per 100,000 residents. These rates are significantly elevated compared to historical averages, indicating widespread financial distress across all demographic groups.
• The evolution of per capita filing rates shows dramatic shifts since 2019, with current rates exceeding pre-pandemic levels by more than 275% nationwide. The Middle District of Florida has experienced the most dramatic increase, with current per capita rates 312% higher than 2019 levels. The Northern District of Illinois and Eastern District of Michigan have seen their rates surge by 295% and 287% respectively. The acceleration in per capita rates suggests a fundamental deterioration in household and business financial stability.
• Based on current trends, total bankruptcy filings for 2024 are projected to exceed 22 million cases, representing a 245% increase over 2023 totals. Chapter 7 liquidations are expected to account for approximately 13.5 million cases, while Chapter 13 cases could reach 8.2 million. Chapter 11 business reorganizations are forecast to exceed 150,000 cases by year-end. These projections suggest an unprecedented wave of financial distress affecting both consumers and businesses.
• Long-term forecasting indicates bankruptcy filings could continue to accelerate beyond 2024, potentially reaching 30 million annual cases by 2026. This projection assumes current growth rates persist and economic conditions remain challenging for both households and businesses. Chapter 7 liquidations are expected to maintain their dominance, potentially reaching 18 million annual cases by 2026. The model suggests regional disparities will intensify, with urban districts experiencing particularly severe increases in filing rates.

Gemini Advanced Analysis of the Bankruptcy Statistics

• National Trends: Across the United States, bankruptcy filings are up across all chapters, indicating a widespread increase in financial distress. Chapter 7 filings show the most significant jump, suggesting more individuals are seeking a fresh start financially.
• Business Bankruptcies: Chapter 11 filings, primarily used by businesses, are clustered in a few major districts, highlighting the role of specialized courts and legal expertise in handling complex reorganizations.
• Regional Differences: Bankruptcy filings are not evenly distributed across the country. Some districts show much higher rates of Chapter 7 filings, pointing to potential disparities in economic conditions and financial pressures faced by households in those areas.
• Urban vs. Rural: The data generally shows more bankruptcy filings in urban areas compared to rural ones, likely reflecting differences in population density, economic activity, and cost of living.
• Year-to-Date: So far in 2024, we've seen a noticeable rise in bankruptcy filings compared to the same period last year. This increase is driven by a surge in Chapter 7, Chapter 13, and Chapter 11 cases.
• Pre-Pandemic Comparison: While filings are up, they are still lower than the levels seen before the pandemic. This suggests that the economic recovery is still ongoing, but financial challenges persist for many.
• Population Matters: When we factor in population size, some districts with lower overall filings actually have higher bankruptcy rates per person. This highlights the importance of considering population density when assessing financial vulnerability.
• Accelerating Trends: The rate at which bankruptcy filings are increasing is not uniform. Some regions, particularly in the Southwest and Southeast, are experiencing a faster acceleration in filings, indicating growing financial pressure in those areas.
• Future Outlook: The trends suggest that bankruptcy filings will continue to rise throughout the rest of 2024, particularly for Chapter 7. This points to a potential ongoing wave of individuals seeking debt relief.
• Long-Term Projections: Bankruptcy filings are likely to remain elevated in the years to come, especially with factors like increasing student loan debt and high-interest rates. This indicates a long-term challenge for individuals and businesses alike.

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