In the first quarter of 2026, the total number of bankruptcy filings in the US rose by 14% to 150,009 cases between January and March, compared to 132,094 in the same period last year.

This increase applies to both consumers and businesses, according to data from Epiq AACER published by the American Bankruptcy Institute (ABI).

The number of bankruptcies in the US rises due to persistent inflation

Small businesses experienced the strongest increase. Subchapter V applications rose by 67% to 833, compared to 499 a year earlier. The number of commercial Chapter 11 applications also increased, by 37% from 1,764 to 2,422.

Consumer cases show the same picture. The number of individual Chapter 7 cases rose by 17% to 89,259. Chapter 13 filings grew by 8% to 51,962. In total, there were 141,573 consumer bankruptcies. But what is the cause of this increase?

“Persistent inflation, high interest rates, limited lending, and global unrest are exacerbating the financial problems of families and small businesses,” said ABI director Amy Quackenboss.

The latest report from the Federal Reserve Bank of New York on household finances shows the pressure. Total household debt stood at $18.8 trillion at the end of Q4 2025. Credit card balances rose to $1.28 trillion, with also deteriorations in mortgage and student loan delinquencies.

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Legislative response and expectation

The U.S. Congress is considering measures to make bankruptcy protection more accessible. Recent proposals from Senator Chuck Grassley and Representative Ben Cline would permanently raise the limit for small business reorganization under Chapter 11 to $7.5 million. The debt limit for Chapter 13 would then increase to $2.75 million.

However, relief may still be some time away. According to the IMF, U.S. inflation is expected to return to the Fed's 2% target only in early 2027, meaning high borrowing costs are likely to persist in 2026.

Meanwhile, the national U.S. debt recently surpassed $39 trillion. This puts even more pressure on the budget. Whether legislation can keep pace with the rising financial problems remains uncertain heading into Q2.

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