Summary (tl;dr)

Bankruptcy filings across the United States are on a significant upward trend in 2025 and 2026 for both businesses and individuals, primarily driven by persistent inflation, high interest rates, and mounting debt burdens.

Essential Background

During the COVID-19 pandemic, government assistance programs and relatively easy access to credit led to a notable decrease in bankruptcy filings, shielding many businesses and individuals from immediate economic hardship. However, these pandemic-era relief efforts have largely expired, setting the stage for a shift in the economic landscape.

The Full Story

Bankruptcy filings have been steadily rising, with total cases increasing by 11% in the 12-month period ending December 31, 2025, and an additional 11.9% for the 12 months ending March 31, 2026, reaching 591,850 cases nationwide. Business bankruptcies alone saw an 11.4% increase in the year ending March 31, 2026. This surge is largely attributed to several interconnected economic pressures: persistent inflation has driven up the cost of goods and services, while elevated interest rates have made borrowing more expensive for both consumers and businesses. U.S. household debt climbed to a record nearly $18.8 trillion by late 2025, accompanied by rising delinquency rates across credit card, mortgage, and student loan categories. Businesses, particularly in sectors like retail, hospitality, real estate, energy, and healthcare, are grappling with higher input costs, labor expenses, and uneven consumer spending patterns, where lower- and middle-income households face increasing strain. Several notable companies, including QVC Group, Saks Global, Rite Aid (for a second time), Hooters, and a Hardee's franchisee operating across nine states, have filed for bankruptcy protection in late 2025 and early 2026.

Why It Matters

The current increase in bankruptcy filings signals significant financial distress affecting a broad spectrum of the economy, from individual households struggling to manage everyday expenses and unexpected costs like medical bills, to businesses contending with challenging operational environments. This trend underscores the ongoing economic challenges, and if defaults continue to accelerate, it could lead to even higher interest rates across various loan types, impacting consumers and businesses further. For companies, the environment necessitates proactive financial planning and potentially exploring out-of-court restructuring options to mitigate the risk of formal bankruptcy.

Geographic Location

• United States (nationwide increase in business and individual bankruptcy filings)
• California, United States (highest number of bankruptcy filings in 2025)
• Florida, United States (second-highest number of bankruptcy filings in 2025; Applebee's franchisee Neighborhood Restaurant Partners Florida filed for Chapter 11; Hooters closed locations)
• Texas, United States (third-highest number of bankruptcy filings in 2025)
• Georgia, United States (fourth-highest number of bankruptcy filings in 2025; Hooters closed locations; Applebee's franchisee Neighborhood Restaurant Partners Florida operates locations)
• Ohio, United States (fifth-highest number of bankruptcy filings in 2025)
• North Dakota, United States (sharpest year-over-year increase in personal bankruptcy filings)
• Alaska, United States (second-sharpest year-over-year increase in personal bankruptcy filings)
• Southern District of Indiana, Indiana, United States (increase in local bankruptcy cases, particularly business cases)