Chapter 7 Bankruptcy Filings (YoY % Change)

Chapter 7 is the bankruptcy people file when the math no longer works.

There is no repayment plan. Non-exempt assets get liquidated by the trustee. Qualifying unsecured debt — credit cards, medical bills, personal loans — gets discharged. It's the option that says: the house is gone or was never there, the income can't support a plan, and the only path forward is to erase what can be erased and start over.

U.S. Courts data show Chapter 7 filings rose 20.1% in fiscal 2024, accelerating from 8.3% the prior year and well above the 10.0% growth in Chapter 13 Filings. The shift matters because it captures a composition change underneath the headline bankruptcy numbers: more households are crossing into total liquidation rather than attempting a payment plan.

The trajectory places current filings on pace to match pre-pandemic levels within a year. The distress feeding it is visible upstream — Credit Card Delinquency still above pre-pandemic norms, Credit Card Charge-Offs at the highest pace since 2011, and Auto Delinquency within touching distance of its GFC peak. Chapter 7 is where all of that lands after 12 to 18 months.