Personal Bankruptcies Rise 12% as Financial Pressure Builds

Americans filed for bankruptcy far more often in 2025 than they did in 2024, continuing a trend in non-business bankruptcy filings that has seen them increase every year since 2022.

Statistics from the Administrative Office of the U.S. Courts show that the number of non-business bankruptcy filings for the year ending December 31, 2025 stood at nearly 550,000 after coming in at approximately 494,000 in the prior year. The numbers for 2025 represent an annual increase of more than 11%.

This year appears headed in a similar direction, as non-business bankruptcy filings rose 12% during the 12 months ending June 30, 2026, compared with the previous 12-month period.

Filing for bankruptcy can be a source of embarrassment for consumers. But the report revealed that experts say increases in filings for personal bankruptcies signal that more people in the U.S. have arrived at a point where their debt pressures have surpassed any potential stigma associated with bankruptcy.

Sasha Indarte, Assistant Professor of Finance at the Wharton School at the University of Pennsylvania, told NPR that the increase in filings for personal bankruptcies signals that consumers are having more difficulties when it comes to keeping up with their financial responsibilities.

Higher prices may be adding to the financial pressure consumers face. U.S. Bureau of Economic Analysis data shows that the price index for personal consumption expenditures rose 3.7% in June over the same month last year.

“This whole post-pandemic surge in prices for just about everything is the biggest thing that’s stressing household budgets,” Ted Rossman, Principal Consumer Finance Analyst at MMI, told USA Today. 

Inflated prices in the grocery aisle and at the gas pump can cause people to make financial moves they’d likely rather not, such as forgoing setting aside funds for the future. A separate NPR report indicates that the personal savings rate fell to a three-year low in June. 

Filing for bankruptcy is another step people may wish to avoid, but it can provide consumers with a path to get their finances back on the right track.

Consumers who are considering filing can pursue a Chapter 7 or Chapter 13 bankruptcy. There are many differences between these two primary forms of bankruptcy that people in the U.S. have available to them. 

But, according to consumer credit reporting company Experian, the main contrast between the two is the way in which each option handles repayment — whether it be a full or partial payback — to the parties one owes money to. 

Chapter 7, which may be the more suitable choice for consumers who meet eligibility requirements, involves the potential liquidation of certain assets a consumer holds so the proceeds can be provided to creditors.

On the other hand, Chapter 13 puts debtors in a position to hang on to their assets. But they must make monthly payments under a repayment plan approved by the court and administered by a bankruptcy trustee.

“Possibly the biggest benefit of petitioning the court for bankruptcy is that all your creditors then have to stop harassing you.” — Mary Eschelbach Hansen, Professor of Economics at American University

People seeking bankruptcy protection must meet the eligibility and filing requirements for the chapter they pursue.

One of the positives of filing for bankruptcy is the automatic stay, which generally stops most collection efforts while a case proceeds.

“Possibly the biggest benefit of petitioning the court for bankruptcy is that all your creditors then have to stop harassing you,” Mary Eschelbach Hansen, a Professor of Economics at American University, told NPR.

Those who fear that filing for bankruptcy will have a negative impact on their credit score should consider that filing doesn’t necessarily make a bad credit situation worse permanently. Further, it can mark the beginning of a credit rebuilding process.

Samuel Antill, Assistant Professor of Business Administration at Harvard Business School, told NPR that his research indicates that most filers’ credit scores return to their prefiling levels within one year and often improve after that.