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Bankruptcy Filings… The Roller Coaster Trend

Jun 14, 2023

Bankruptcy statistics from the American Bankruptcy Institute show Bankruptcy filings from all bankruptcy filings totaled 35,479 in the month of April 2023, this includes business and non-business filings. This is a 9 % increase from the 32,530 overall filings in April 2022. Non-business filings include Chapter 7 and Chapter 13 bankruptcies, which are the most common types of bankruptcy for individual debtors.

Chapter 7 bankruptcy is also known as “liquidation” or a “clean slate” or “Fresh Start”, as it involves the liquidation of the debtor’s non-exempt assets to pay off creditors. This includes unprotected assets such as second homes, recreational toys and non-exempt funds. Chapter 7 Bankruptcy filings increased in the month of May 2023 by 22% to 21, 625 filings from one year earlier in May 2022.

Chapter 13 bankruptcy, on the other hand, allows individuals with regular income to repay their debts over a period of three to five years. In the most recent data, these case filings increased 25% to 14,644 case filings from May 2022 to May 2023.

According to data from Epiq Bankruptcy, the leading provider of United States Bankruptcy filing data, Chapter 11 Commercial Bankruptcy filings totaled 680 bankruptcy filings in the United States in the month of May 2023. This represents a 105% increase in filings from the same month one year prior in May 2022, which had 332 filings. Chapter 11 bankruptcy is typically used by businesses to restructure their debts and operations. Small Business also known as subchapter 5 filings increased 31% with 149 filings in May 2023 versus the past 114 filings in May 2022.

In conclusion, this significant increase is likely due in part to the various government aid programs and stimulus measures put in place in response to the COVID-19 pandemic that have ceased and rising interest rates in combination with consumer spending habits changing.

[Advertising] Killed the Radio Star

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