Summary (tl;dr)

Bankruptcy filings are significantly increasing across the United States and globally in 2026 for both businesses and individuals, driven by persistent high interest rates, inflation, tighter credit conditions, and elevated operating costs.

Essential Background

Following a period of historically low levels during and immediately after the COVID-19 pandemic, bankruptcy filings began a steady ascent in 2023. This resurgence reflected growing financial pressures on companies and households as economic conditions shifted. Many entities that accumulated debt in the low-interest-rate environment of 2020-2022 are now facing the challenge of refinancing at significantly higher rates, while the expiration of various pandemic-era relief programs has also added to the financial strain.

The Full Story

In 2026, the trend of increasing bankruptcies continues to accelerate, with substantial year-over-year rises observed across various categories. Total U.S. bankruptcy filings increased by 12.2% in the 12-month period ending June 30, 2026, including a 16.9% rise in business filings and a 12% increase in non-business (individual) filings. Commercial Chapter 11 filings, a key indicator of corporate distress, jumped by 28% in the first half of the year, while Subchapter V filings, designed for small businesses, surged by 50% over the same period, signaling significant pressure on smaller enterprises. Globally, business insolvencies are projected to rise by 2.8% in 2026, with a 4% increase specifically anticipated for the United States. This widespread increase is attributed to several economic factors, including elevated interest rates hiking debt-service obligations, stricter lending standards limiting refinancing options, ongoing inflationary pressures impacting labor and operating costs, and softening demand in certain sectors. Industries most affected include retail, healthcare, manufacturing, commercial real estate, hospitality, and multi-unit restaurant franchisees, which are grappling with high labor and food costs. Individual bankruptcy filings are also climbing, with both Chapter 7 and Chapter 13 cases on the rise due to increasing everyday expenses, record-high credit card debt, depleted savings, and the resumption of federal student loan payments.

Why It Matters

The current surge in bankruptcies indicates a broad-based economic strain impacting both businesses and consumers. For companies, this translates to heightened financial instability, potential job losses, and a challenging operational environment, which can have ripple effects across supply chains and overall economic productivity. The rise in individual bankruptcies highlights a growing struggle for many households to manage debt and essential living costs, potentially leading to long-term financial insecurity and a dampening effect on consumer spending. This sustained upward trend suggests that the economy may be entering a prolonged period of restructuring rather than a brief downturn, necessitating careful monitoring by policymakers and businesses alike. The notable increase in small business bankruptcies is particularly concerning, as these enterprises are crucial drivers of local economies and job creation.

Geographic Location

• United States (widespread increase in business and individual bankruptcy filings)
• Southern District of Indiana, Indiana, United States (increased bankruptcy cases)
• Canada (expected increase in insolvencies)
• China (projected rise in insolvencies)
• France (expected increase in insolvencies)
• Germany (forecasted increase in insolvencies)
• Netherlands (expected increase in insolvencies)
• Switzerland (experiencing abnormally high rates of insolvency)
• United Kingdom (estimated increase in insolvencies)