Bankruptcy on the rise in the United States of America

The Administrative Office of the United States Courts keeps track of many things including the number of people and businesses that file for bankruptcy. According to data released this morning, filings for both increased 16.2 percent in the federal fiscal year that ended on September 30, 2024. 

There were 504,112 total bankruptcies filed in FY2024 compared to 433,658 in 2023. Both are still below 2020 when 612,561 homes and people sought a court’s protection from debt. 

“Business filings rose 33.5 percent, from 17,051 to 22,762 in the year ending September 30, 2024,” reads an information release sent out on November 7. “Non-business bankruptcy filings rose 15.5 percent to 481,350, compared with 416,607 in the previous year.”

Each of these filings listed in the announcement are in one of four categories. 

• According to U.S. Courts, Chapter 7 allows for a debtor’s property to be sold to be liquidated to pay back creditors
• Chapter 11 allows for a reorganization of a corporation or partnership to allow a business to stay alive so creditors can be paid back over time
• Chapter 12 is for family farms or a “family fisherman” as defined in the Bankruptcy Code
• Chapter 13 is to allow for the adjustment of debts by an individual with regular income

According to the release, total filings have decreased over the last 14 years from a high of 1.6 million in September 2010. 

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