US Economy Faces Surge in Bankruptcies, Affecting Households and Small Businesses
The United States is currently experiencing a significant surge in bankruptcies, affecting a wide range of households and businesses. Driven by rising costs and tighter credit conditions, this trend represents the most substantial increase in corporate bankruptcies in over 15 years. The American Bankruptcy Institute (ABI) highlights the challenges consumers and businesses face in today’s economy.
Key Factors Contributing to Bankruptcy Surge
According to Amy Quackenboss, the executive director of ABI, ongoing geopolitical volatility, along with rising expenses, is placing immense pressure on both households and businesses. This year has seen a notable increase in bankruptcies across nearly every sector.
An Unusual Pattern of Bankruptcies
Unlike previous downturns, this wave of bankruptcies is not concentrated within specific industries. Robert Stark, a partner at Brown Rudnick’s bankruptcy and corporate restructuring practice, noted that current bankruptcies span a wide array of sectors, marking a departure from prior trends where certain industries tended to dominate filings.
High-Profile Bankruptcies
This year has witnessed several major corporate bankruptcies, including:
- Sonder
- Spirit Airlines
- Del Monte Foods
- Claire’s
- Omnicare, a subsidiary of CVS Health
Each of these firms reported liabilities exceeding $1 billion, placing them among the largest bankruptcies of the year. According to S&P Global Market Intelligence, there were 717 bankruptcy filings by November 2025, surpassing the previous year’s total of 687. Notably, this figure indicates the highest annual count of large corporate bankruptcies since 2010.
Industry Breakdown of Bankruptcies
The sectors most affected by bankruptcies to date include:
| Sector | Bankruptcy Filings |
|---|---|
| Industrials | 110 |
| Consumer Discretionary | 85 |
| Healthcare | 46 |
Small Business Impact
The rising bankruptcy rates extend beyond large corporations, significantly impacting small businesses. Many small firms are opting for Subchapter V bankruptcy filings under Chapter 11, which offers a streamlined process for restructuring.
Data from Epiq Bankruptcy Analytics shows over 2,300 Subchapter V filings year-to-date, reflecting nearly a 10% increase compared to the same timeframe last year. In November alone, 223 Subchapter V filings were recorded, marking a 23% increase from the prior year.
Personal Bankruptcies on the Rise
Individual bankruptcies are also experiencing a notable increase. In November 2025, personal bankruptcy filings rose by 8%, totaling 40,973, compared to 37,814 in November 2024. The breakdown of individual filings includes:
- Chapter 7 filings: 25,329 (up 11% from the previous year)
- Chapter 13 filings: 15,558 (up 5% from the previous year)
Quackenboss stated that for financially challenged families and businesses, bankruptcy remains a critical tool to regain stability and work toward a financially sound future.
