U.S. bankruptcy filings surged by 18% in 2023 on the back of higher interest rates, tougher lending standards and the continued runoff of pandemic-era backstops, data showed, although insolvency case volumes remain well below the level seen before the outbreak of COVID-19.
Total bankruptcy filings — encompassing commercial and personal insolvencies — rose to 4,45,186 last year from 3,78,390 in 2022, according to data from bankruptcy data provider Epiq AACER. Commercial Chapter 11 business reorganisation filings shot up by 72% to 6,569 from 3,819 the year before, Epiq AACER said. Consumer filings rose 18% to 4,19,55 from 3,56,911 in 2022. For the final month of the year, total filings dipped to 34,447 from 37,860 in November, though they were up 16% from a year earlier. Bankruptcy case counts are expected to keep climbing in 2024, though there is still some distance to go to top the 7,57,816 bankruptcies filed in 2019, the year before pandemic struck.
“We saw new filings in 2023 increase momentum over 2022 with a significant number of commercial filers leading the expected increase and normalisation back to pre-pandemic bankruptcy volumes,” said Michael Hunter, VP, Epiq AACER. “We expect the increase in number of consumer and commercial filers seeking bankruptcy protection to continue in 2024 given the runoff of pandemic stimulus, increased cost of funds, higher interest rates, rising delinquency rates, and near historic levels of household debt.”
Household debt did, in fact, stand at a record high of $17.3 trillion at the end of the third quarter.
