Increases in bankruptcy filings reach 18 consecutive months
We’re now a year and a half into the upward march for bankruptcies.
Reinforcing findings from the Consumer Stress Legal Index (CSLI) recently shared by LegalShield, data provided by Epiq Bankruptcy last week showed total bankruptcy filings jumped 17% year-over-year in January.
Epiq reported total bankruptcy filings came in at 36,607 in January up from the January 2023 total of 31,176.
Experts said January marked 18 consecutive months that total, individual, and commercial bankruptcy filings have registered monthly year-over-year increases.
Epiq discovered individual bankruptcy filings also increased 17% in January to 34,515, up from the January 2023 individual filing total of 29,448.
According to the new update, there were 19,590 individual Chapter 7 filings in January, marking a 25% increase above the 15,717 filings recorded during the same month last year.
Experts noted there were 14,871 individual Chapter 13 filings in January, representing a 9% rise above the 13,678 filings last January.
Furthermore, overall commercial bankruptcy filings jumped 21% in January, according to Epiq, which tabulated that segment generated 2,092 cases last month versus 1,728 filings a year ago.
Experts pointed out that there were 460 commercial Chapter 11 filings recorded in January, representing a 22% increase from the 378 commercial Chapter 11 cases in January 2023.
Epiq added small business filings — captured as subchapter V elections within Chapter 11, increased 43% to 176 in January, up from 123 in January of last year.
“As expected, the upward trend of bankruptcy filing volumes persist into the new year and we expect that trend to continue, particularly as the spring tax season concludes,” said Michael Hunter, vice president of Epiq AACER.
“High interest rates, price fatigue and the pandemic-era excess consumer savings depletion are all contributing factors to the increases now and into 2024,” Hunter continued in a news release.
Looking at a sequential comparison, Epiq explained January’s total filing figure represented a 6% rise from the 34,481 filings completed in December.
Consumer bankruptcy filings moved 7% higher month-over-month, according to Epiq.
“Households and businesses continue to adjust to sustained high interest rates, persistent inflation and more stringent lending terms,” American Bankruptcy Institute executive director Amy Quackenboss said in the news release.
“While not at the levels recorded prior to the pandemic, we anticipate that the steady increase in bankruptcies will continue this year,” Quackenboss went on to say.
ABI has partnered with Epiq Bankruptcy to provide the current bankruptcy filing data for analysts, researchers and members of the news media.