US Bankruptcy Filings Surged 11% in 2025 Amid Mounting Debt Pressure
The sharp increase, driven by a 15% jump in personal liquidations, signals growing financial distress for consumers and corporations after a period of economic resilience.
Total U.S. bankruptcy filings climbed 11% in 2025 from the previous year, a stark reversal of recent trends that suggests the cumulative weight of high interest rates and record debt levels is beginning to fracture the finances of American households and businesses.
The concerning rise was detailed in a report from GlobeNewswire, which highlighted a particularly sharp 15% year-over-year increase in individual Chapter 7 filings — a form of personal bankruptcy that typically involves the liquidation of assets to pay creditors. The data serves as a critical warning sign of intensifying financial distress beneath the surface of the U.S. economy.
The increase marks a significant shift from the economic picture in late 2024, which was characterized by surprising resilience. The U.S. economy saw steady GDP growth and robust consumer spending through the end of that year, leading many economists to believe a "soft landing" was probable. However, the 2025 bankruptcy data indicates that persistent inflation and the resulting high cost of capital are taking a mounting toll.
The surge in filings comes as both consumers and corporations grapple with historic debt burdens. By the third quarter of 2025, total U.S. household debt had swelled to a record $18.59 trillion, according to data from the Federal Reserve Bank of New York. While mortgage debt remained the largest component, the most acute stress appeared in other areas. Delinquency rates for credit card balances and student loans were on the rise throughout the year.
This pressure on consumers is reflected directly in the 15% jump in personal liquidation filings, which point to a growing number of individuals for whom debt has become unmanageable. The trend aligns with forecasts made by firms like TransUnion, which projected that serious credit card delinquency rates would continue to climb in 2025.
On the corporate side, the environment has become equally perilous. The average risk of default for U.S. public companies hit a post-Global Financial Crisis high at the end of 2024 and was expected to remain elevated through 2025, as noted by analysts at Moody's. Companies are facing a looming "debt wall," with over $700 billion in corporate debt having matured in 2025 and another $1 trillion coming due in 2026, forcing many to refinance at significantly higher interest rates than they previously enjoyed.
As a crucial leading indicator, the sharp increase in bankruptcies provides a tangible measure of the economic strain that had previously only been visible in debt and delinquency statistics. The data suggests that the resilience shown by the U.S. economy may be waning and that 2026 could bring further slowdowns and a potential increase in unemployment as the full impact of this financial distress ripples through the broader market. Federal Reserve policymakers are certain to monitor this trend closely as they deliberate the future path of interest rates.