Bankruptcy Statistics 2026: Chapter 7, Chapter 13 Filings & Trends
Bankruptcy is the last stage of financial distress — the point where a household has exhausted every other option. After years of pandemic-era suppression, filings are accelerating, and the ratio of liquidations to repayment plans is climbing. Data from the U.S. Courts, the American Bankruptcy Institute, and the Federal Reserve.
Last updated: 2026-03-23
What Are the Current Bankruptcy Statistics?
U.S. consumer bankruptcy filings rose 20% year-over-year as of 2025-Q4, the 11th consecutive quarter of annual increases. Chapter 7 liquidation filings changed 20.1%, while Chapter 13 repayment plans changed 10.0%. The Wipeout Ratio — Chapter 7-to-Chapter 13 filings — stands at 1.68, and the all-loan charge-off rate is 0.61%.
The sustained acceleration in filings, combined with the compositional shift toward liquidation over restructuring, confirms that pandemic-era suppression has fully unwound and household financial buffers are exhausted. See the full discharge and means test definitions.
At a Glance
The American Distress Index currently reads 59.0 (Elevated). Bankruptcy filings are the terminal confirmation of the pattern the ADI tracks. When savings erode, delinquencies follow. When delinquencies persist, legal defaults are the result. Rising filings — particularly the accelerating shift toward Chapter 7 liquidation — confirm that debt stress is converting into permanent household financial failure. Servicer practices shape how many delinquencies become bankruptcies: Wells Fargo, Ocwen/Onity Group, and Citibank have faced CFPB enforcement actions for servicing failures that pushed borrowers toward bankruptcy rather than modification. See all 76 servicer profiles for enforcement histories.
Total Bankruptcy Filings (YoY Change)
Consumer bankruptcy filings rose 20% year-over-year in 2025-Q4, extending what is now the 11th consecutive quarter of annual increases. This is not a temporary correction from pandemic lows — it is a sustained, compounding trend that has outlasted every "transitory" explanation.
The pandemic era artificially suppressed filings through a combination of stimulus payments, eviction moratoriums, and student loan pauses. That support has fully unwound — student loan delinquency has surged since repayment resumed. Current filing rates have returned to — and in some categories surpassed — pre-pandemic levels, now compounded by sustained high interest rates and savings buffers depleted during the 2022-2023 inflation shock.
Bankruptcy Filings Year-over-Year Change (%)
Source: U.S. Courts / American Bankruptcy Institute.
Full data and trend: Bankruptcy Filings indicator page
Chapter 7 vs. Chapter 13 Filings
Chapter 7 filings — total liquidation, where all qualifying debt is erased — rose 20.1% year-over-year in 2024-Q3. Chapter 13 filings — structured repayment plans — increased 10.0% over the same period, a notable deceleration from the 19.5% growth rate the prior year.
The divergence is the editorial story. Chapter 7 is the option of last resort — total liquidation, where all qualifying debt is erased because the filer has no disposable income to repay creditors. Chapter 13, the structured repayment plan, implies the filer still has income to reorganize around. That Chapter 7 growth is accelerating while Chapter 13 decelerates signals a compositional shift: more households are reaching the point where restructuring is not an option — the same population eating into retirement savings at triple the pre-pandemic rate. They have nothing left to reorganize.
Chapter 7 and Chapter 13 Filings YoY Change (%)
Source: U.S. Courts Bankruptcy Statistics.
Full data: Chapter 7 | Chapter 13 indicator pages
The Wipeout Ratio (Chapter 7-to-13 Filing Ratio)
The ratio of Chapter 7 to Chapter 13 filings — what we call The Wipeout Ratio — stood at 1.68 in 2025. This means for every household choosing a structured repayment plan, nearly 1.7 are choosing total liquidation.
The ratio bottomed at 1.42 in 2023, when pandemic-era debt restructuring surged and liquidation fell. Its climb since then tracks the exhaustion of household financial buffers documented elsewhere in the ADI — savings rates at historic lows, credit card balances at record highs, hardship withdrawals accelerating. A rising Wipeout Ratio is the legal system's way of confirming what the financial data already shows: more households have nothing left to save.
Chapter 7-to-Chapter 13 Filing Ratio
Source: U.S. Courts Bankruptcy Statistics.
Full data and trend: The Wipeout Ratio indicator page
All-Loan Charge-Off Rate (Bankruptcy Proxy)
The charge-off rate on all loans and leases at commercial banks was 0.61% in 2025-Q4, according to the Federal Reserve via FRED. Charge-offs represent debt that banks have permanently written off — the financial system's formal acknowledgment that these borrowers will not recover.
The trajectory tells the story. This rate has more than tripled from the pandemic-era trough of 0.19% and now exceeds the pre-pandemic baseline of 0.48%. The financial crisis peak of 3.14% in 2009 remains distant, but the current three-year climb in charge-offs confirms what delinquency data signaled quarters earlier: missed payments are converting into permanent losses at an accelerating pace. For the full cross-loan-type view, see the default rates comparison hub.
Charge-Off Rate on All Loans (All Commercial Banks)
Source: Board of Governors of the Federal Reserve System via FRED (CORALACBN).
Full data and trend: Charge-Off Rate on All Loans indicator page
Data Sources and Methodology
U.S. Courts / American Bankruptcy Institute
Consumer bankruptcy filing data reported quarterly by federal fiscal year (October-September). Includes total filings, Chapter 7 liquidation, and Chapter 13 repayment plan breakdowns. The Wipeout Ratio is calculated from these chapter-level counts.
Federal Reserve Board / FRED
All-loan charge-off rate (CORALACBN) measures debt permanently written off by commercial banks as uncollectable. Quarterly frequency, sourced from bank call reports. Serves as a financial system proxy for realized bankruptcy losses.
American Distress Index
Bankruptcy filings and charge-off rates serve as lagging confirmation within the ADI framework — they validate that debt stress measured through delinquency rates is producing actual defaults. Full methodology on the methodology page.
Frequently Asked Questions
How many bankruptcies are filed per year in the United States?
Approximately 480,000-500,000 consumer bankruptcy cases were filed in 2025, according to the Administrative Office of the U.S. Courts and the American Bankruptcy Institute. Filings have risen year-over-year for 11 consecutive quarters after pandemic-era suppression from stimulus payments, eviction moratoriums, and student loan pauses.
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
Chapter 7 is liquidation bankruptcy — qualifying debts are erased entirely, but non-exempt assets may be sold. Chapter 13 is a repayment plan — the filer keeps assets but repays creditors over 3-5 years. Chapter 7 filings changed 20.1% year-over-year in 2024-Q3, while Chapter 13 changed 10.0%. The growing preference for Chapter 7 signals that more households lack the income to restructure.
Is bankruptcy increasing in 2026?
Yes. Total bankruptcy filings rose 20% year-over-year as of 2025-Q4, marking the 11th consecutive quarter of annual increases. The trend reflects the unwinding of pandemic-era support combined with sustained high interest rates and depleted household savings buffers.
What is the Wipeout Ratio?
The Wipeout Ratio is American Default's name for the Chapter 7-to-Chapter 13 filing ratio. It currently stands at 1.68, meaning for every household choosing a structured repayment plan, nearly 1.7 are choosing total liquidation. A rising ratio indicates that more filers have no disposable income to repay creditors — they have nothing left to reorganize.
How does bankruptcy connect to the American Distress Index?
Bankruptcy filings feed the ADI's Legal Filings component and serve as lagging confirmation of household financial distress. In the ADI framework, savings depletion leads to delinquencies, and persistent delinquencies lead to legal defaults including bankruptcy. The ADI currently reads 59.0 (Elevated). Rising filings — especially the shift toward Chapter 7 liquidation — confirm that debt stress is converting into permanent household financial failure.