‘Mounting economic challenges’ push February bankruptcies higher
Connected with what one expert said is “the mounting economic challenges they now face,” consumers and businesses combined to generate double-digit increases year-over-year in new bankruptcy filings in February,
According to data provided by Epiq Bankruptcy, the 31,889 total new bankruptcy filings in February represented an 18% rise from the 27,006 filings registered last February.
Epiq reported total commercial filings increased 18% to 1,696 versus 1,442 a year earlier. Commercial Chapter 11 filings rose 83% to 373 filings, up from 204. Subchapter V small business filings increased 45% to 120 versus the 83 filings registered the previous year.
Continuing year-over-year, total individual consumer filings climbed 18% to 30,193 versus 25,564 in February of last year.
While still below pre-pandemic levels, Epiq noted individual Chapter 7 filings jumped 12% to 16,991 versus 15,190, and individual Chapter 13 filings increased 28% to 13,149 versus 10,311 the previous year.
“The growing number of households and businesses filing for bankruptcy reflects the mounting economic challenges they now face,” American Bankruptcy Institute executive director Amy Quackenboss said in a news release posted by Epiq.
“Debt loads are expanding as the prices of goods and services have gone up with inflation and the cost of borrowing continues to rise. While pandemic relief efforts have largely expired, the safe haven of bankruptcy is continually available for financially distressed businesses and consumers,” Quackenboss continued.
Comparing month-over-month, and considering there are three fewer days in February, Epiq pointed out the 31,889 total filings were still 2% higher than the 31,161 in January.
Total commercial filings decreased 1% percent to 1,696 from 1,713 the month prior. Total Chapter 11 filings remained flat 373 versus 376 and Subchapter V increased five percent to 120 from 114.
Epiq went on to mention total individual filings increased 3% month-over-month to 30,193 from 29,448 while individual Chapter 7 filings rose 8% to 16,991 from 15,717 and the individual Chapter 13 filings dripped 4% to 13,149 from the 13,678 filed in January.
Comparing open to closed cases, while new filings are on the rise, Epiq added that the current 662,204 total open cases represent another month-over-month decline. There are 36 percent fewer open cases since May 2019 when there were more than one million.
Looking back one year, Epiq said there are 52,662 fewer open cases than the 714,866 in February 2022, marking a 7% decline.
“Overall, the stimuluses have had a positive effect for individuals and companies, as 10,843 more cases have closed than opened in 2023,” said Gregg Morin, Vice President of Business Development and Revenue for Epiq Bankruptcy. “However, as new monthly filings rise, this trend is likely to end.”
ABI has partnered with Epiq Bankruptcy to provide the most current bankruptcy filing data for analysts, researchers and members of the news media.