Individuals made 444,252 filings from January to September, while businesses made 25,467 filings, up 7%, the ABI said [1].
"The continued increase in bankruptcy filings reflects the strain of higher borrowing costs, rising household expenses, growing consumer delinquencies, and a softer job market," Michael Hunter, vice president of bankruptcy data provider Epiq AACER, said in the statement [1].
Consumer Filings Reflect Borrowing Costs, Delinquencies, Job Market
The average weekly rate on a 30-year fixed-rate mortgage is at its highest level in roughly three years, and the credit card interest rate has been above 20% for more than three years, according to the source material [1]. These borrowing costs are straining household budgets as wage growth fails to keep pace with expenses.
Joelle Scally, economic policy adviser at the New York Federal Reserve, said in an Aug. 11 statement that new consumer delinquencies for credit cards and auto loans "remain at elevated levels" [1]. The combination of high interest rates and rising delinquencies places additional pressure on consumers already struggling with inflation.
The United States added fewer jobs than expected in September, according to the source material [1]. A softer labor market reduces income growth and makes it harder for indebted households to manage their obligations.
Small Business Subchapter V Filings Up 46%
Subchapter V allows small businesses to reorganize debts more efficiently while remaining operational. Small business Subchapter V filings jumped 46% compared with the same period a year earlier, according to the source material [1]. The sharp increase underscores the particular strain facing smaller enterprises, which typically have thinner margins and less access to capital than larger competitors.
"The increase in bankruptcy filings, especially among small businesses, highlights the challenges many debtors continue to face amid persistent inflationary pressures, elevated borrowing costs, and economic uncertainty," Amy Quackenboss, ABI executive director, said in the statement [1].
Since the U.S.-Iran war broke out in late February, 12-month inflation has remained elevated, peaking at 4.2% in May and falling to 3.4% in August, but remaining above the 2.4% rate recorded in February, according to Bureau of Labor Statistics data [1]. Persistent inflation forces businesses to absorb higher input costs and consumers to spend more on essentials, reducing discretionary spending that supports small enterprises.
Large Corporate Bankruptcies Remain Above Historical Average
One hundred large companies filed for bankruptcy between July 2025 and June 2026, 22% above the 2005-2025 historical average, according to an Oct. 8 statement from Cornerstone Research [1]. In the past 12 months, there were 28 bankruptcy filings with reported assets exceeding $1 billion, the firm said [1].
"The continued elevated pace of large corporate bankruptcies reflects persistent challenges of the broader economic environment for companies that rely on debt financing," Matt Osborn, principal at Cornerstone Research and report coauthor, said in the statement [1]. Osborn also said that "high interest rates and regulatory uncertainty, along with shifting demand and competitive dynamics within certain sectors such as manufacturing, remain the most frequently cited drivers of distress among large bankruptcy filers" [1].
Separately, S&P Global reported on Sept. 23 that U.S. business activity growth accelerated for the fourth straight month in September, with manufacturing new orders at their highest level since April 2022 [1]. Chris Williamson, chief business economist at S&P Global Market Intelligence, said in the report that "Business is clearly booming now in both manufacturing and services" [1]. The contrast between rising bankruptcies and expanding business activity suggests uneven conditions across sectors and firm sizes.
Bill Would Raise Bankruptcy Debt Thresholds
Quackenboss said that Congress's passage of the Bankruptcy Threshold Adjustment Act would expand "access for struggling businesses and families seeking bankruptcy relief" [1]. The measure seeks to raise the small-business Chapter 11 Subchapter V bankruptcy debt threshold to $7.5 million from $3.4 million, and to increase the debt limit for individuals under Chapter 13 bankruptcy to $2.75 million from roughly $2.1 million, according to the source material [1].
The bill has been passed by both the House and the Senate, according to the source material [1]. If enacted, the higher thresholds would allow more small businesses and individuals to qualify for streamlined bankruptcy procedures, potentially reducing the cost and complexity of debt reorganization. The legislation reflects ongoing efforts to adapt bankruptcy law to economic conditions marked by elevated debt levels and persistent inflation.
Conclusion
Bankruptcy filings in the first nine months of 2026 rose 11% from a year earlier, with 469,719 total cases recorded by the ABI. Consumer filings accounted for the vast majority at 444,252, while business filings increased 7% to 25,467. Small business Subchapter V filings jumped 46% to 2,442.
The data reflect an economy where many households and businesses face elevated borrowing costs, persistent inflation, and a softer job market. While some sectors report strong activity, the overall rise in bankruptcy filings indicates financial distress remains widespread. The Bankruptcy Threshold Adjustment Act, already passed by both chambers of Congress, would raise debt thresholds for small business and individual filings, potentially expanding access to bankruptcy relief.
Reference
- US Bankruptcy Filings Rise By 11% In First 9 Months Of 2026. https://www.zerohedge.com/personal-finance/us-bankruptcy-filings-rise-11-first-9-months-2026
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