The bankruptcy statistics in this article will provide a high-level view of consumer bankruptcy filings around the country, bankruptcy rates from state to state, the types of bankruptcy cases most often filed, and the financial problems that trigger bankruptcy filings.
When you’re struggling financially and considering bankruptcy, it’s easy to feel like you’re alone in the world. In fact, though, hundreds of thousands of U.S. consumers file bankruptcy each year. The bankruptcy statistics in this article will provide a high-level view of consumer bankruptcy filings around the country, bankruptcy rates from state to state, the types of bankruptcy cases most often filed, and the financial problems that trigger bankruptcy filings. Business bankruptcies typically make up a small percentage of the bankruptcy cases filed each year. The vast majority of bankruptcy cases are filed by individuals and couples who are struggling with consumer debts--debts like credit card balances and medical bills.
Bankruptcy Filing Trends
In the early 2000s, bankruptcy filings hovered near or slightly above 1.5 million per year. The vast majority of those filings were consumer cases, and most of those were Chapter 7 bankruptcy cases. In 2005, due mostly to concerns about changes in the U.S. Bankruptcy Code that took effect in October of that year, personal bankruptcy filings spiked to more than two million. The law that triggered this rush to file was the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). BAPCPA made it harder for some consumers to file bankruptcy and introduced new requirements like pre-filing credit counseling.
The following year, the number of bankruptcy filings dropped off dramatically. In 2006, fewer than 600,000 bankruptcy cases were filed around the country.filing The number of filings gradually increased until 2010 when, at the heart of the great recession and the foreclosure crisis, post-BAPCPA filings peaked at more than 1.5 million.
Who Files for Bankruptcy in the United States?
Business bankruptcies make up only a small percentage of bankruptcy filings each year. For example, according to data provided by the American Bankruptcy Institute (ABI), just 5.1% of the bankruptcy petitions filed during the 2019 calendar year were commercial cases. 718,553 of the 757,497 bankruptcy filings in the United States during that time were non-business filings.
Gathering complete and accurate bankruptcy data has been complicated, and different researchers have come to different conclusions about exactly who is filing bankruptcy and why. The Center for Economic Studies (CES) conducted a more in-depth examination of bankruptcy filers over time and determined that those who filed personal bankruptcy cases were:
More likely than the general population to be employed, and to have been employed in the year preceding the bankruptcy filing
Less likely than the general population to be self-employed
More likely than the general population to be veterans
More likely than the general population to be divorced, separated, or widowed
Less likely than the general population to be immigrants
In other words, veterans and people who are divorced, separated, and widowed are over-represented in bankruptcy, while immigrants and the self-employed are under-represented.
The CES study also showed that more than 80% of bankruptcy filers had graduated from high school, and about half had at least some college.
According to separate data presented by the Kaiser Family Foundation (KFF), white Americans and black Americans are both over-represented, while those of Hispanic and Asian descent are less likely to file for bankruptcy.
While many of these trends have remained relatively stable over time, another recent study revealed that bankruptcy is increasingly common among older Americans. Some key statistics include:
The average age of a bankruptcy filer in the U.S. increased from 44.4 years in 2007 to 48.5 years less than a decade later
One in seven bankruptcy petitioners in the U.S. is aged 65 or older
The bankruptcy filing rate for those aged 65-74 increased by more than 200% between 1991 and 2016
In 1991, people aged 75 and older made up just .3% of bankruptcy filers; by the late 2010s, this same group accounted for 3.3% of all bankruptcy cases filed
In 1991, Americans aged 25-34 filed bankruptcy at the highest rate. By 2001, those aged 35-44 had claimed the lead. Among those filing between 2013 and 2016, people aged 45-54 were most likely to declare bankruptcy. Across this same time span, the bankruptcy filing rates among those aged 18-24 and 25-34 have dropped dramatically. In short, bankruptcy is becoming less common among younger generations, and more frequent among those who are middle-aged and retirement-aged.
Why Do People File Bankruptcy?
Every bankruptcy filer’s situation is a bit different. But, there are some common triggers for bankruptcy. Life events that frequently contribute to bankruptcy filings include:
Job loss: One study published by the Federal Reserve Board showed that households were about 2.5 times as likely to file for bankruptcy in the year following a job loss.
Medical bills: In a study published by Harvard Law professor Elizabeth Warren in 2007, 29% of survey respondents cited medical bills as the reason for their bankruptcies, and 57% said they’d had problems with medical debt.
Illness: In response to a separate question, more than 40% of respondents to the same survey cited loss of income due to illness.
Divorce: Many studies, including the CES report mentioned above, confirm a link between divorce and bankruptcy, though experts disagree as to whether there is a cause-effect relationship and if so, which event is the trigger.
Another element that likely impacts bankruptcy filings is student loan debt. Student loan debt is less studied in connection with bankruptcy, since this type of debt usually isn’t dischargeable. But, the increased financial burden of student loan debt can still trigger a personal bankruptcy filing.
In 2019, LendEDU analyzed data from more than 1,000 U.S. consumers who used Upsolve to file Chapter 7 bankruptcy cases. Researchers found that 32% of those filing Chapter 7 were carrying student loan debt. On average, student loan debt made up nearly half of their total debt. In fact, student loan debt accounted for a larger percentage of total debt across all bankruptcy filers than any other single category. The total amount of student loan debt was more than double the amount of auto loan debt, triple the amount of debt in collections, and five times as large as total medical debt.
Chapter 7 v. Chapter 13 Bankruptcy Statistics
The Administrative Office of the U.S. Courts makes bankruptcy filing data available monthly, quarterly, and annually. Across the country, about 62.4% of personal bankruptcy cases are Chapter 7 cases, and about 37.5% are filed under Chapter 13. The remainder are Chapter 11 cases.
Percentages differ from state to state. In Alaska--the state with the smallest number of annual bankruptcy filings in the country--Chapter 7 cases make up more than 79% of filings. In the U.S. Bankruptcy Court for the Northern District of California, 41.6% of consumer bankruptcy cases are filed under Chapter 13.
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Personal Bankruptcy Success Statistics
Comprehensive statistics about bankruptcy success rates aren’t readily available. But, the U.S. Bankruptcy Court for the Central District of California--one of the highest-volume bankruptcy courts in the country--makes this information available. 94.1% of Chapter 7 bankruptcy filers who were represented by bankruptcy attorneys received a discharge. That means some or all unsecured debts were legally eliminated. Success rates were lower for those who didn’t hire an attorney: 88.4% for those who worked with non-attorney bankruptcy petition preparers and just 55.6% for those who didn’t disclose any assistance. For comparison, 98% of Chapter 7 filers nationwide who used Upsolve received a discharge.
Success rates for Chapter 13 cases are much lower. The data from the Central District of California shows successful completion in just 69.1% of cases where the debtor was represented by an attorney. The success rate for self-represented filers is less than 3%.
Credit Scores and Bankruptcy
If you’re worried about how bankruptcy might affect your credit score, these statistics are for you. The Federal Reserve Bank of Philadelphia found that the average Chapter 7 bankruptcy filer sees an 80+ point credit score increase after discharge. The bump for Chapter 13 filers who successfully complete their plans and receive a discharge is about 75 points.
Of course, how much your credit score improves after bankruptcy and how long it takes will depend in large part on the choices you make. But, people whose scores have already been knocked down by past-due bills often see a boost right away.
Upsolve Helps People Get Financial Relief
Upsolve is a non-profit organization dedicated to helping people in tough financial circumstances get back on their feet. Whether you are overwhelmed by credit card debt, have been knocked off your feet by the high cost of health care, or have faced a setback like job loss or divorce, we’re here to help you find the best way to rebuild. Our free app helps many people file Chapter 7 bankruptcy without an attorney. We also provide resources to help you explore other options, such as credit counseling and debt management plans.
If your Chapter 7 case is complicated, you don’t qualify for assistance from Upsolve, you aren’t eligible for Chapter 7 bankruptcy, or you have non-exempt property you want to protect through a Chapter 13 case, we can help you connect with a bankruptcy attorney.