According to Epiq Bankruptcy, there were 36,607 total bankruptcy filings in the U.S. in January, a 17% increase from the 31,176 recorded in January of last year. With such an increase, total bankruptcy filings, as well as individual and commercial filings, have increased on a year-over-year basis every month for 18 consecutive months.

Individual bankruptcy filings also increased 17% in January to 34,515, up from the January 2023 individual filing total of 29,448. There were 19,590 individual Chapter 7 filings in January, a 25% increase from the 15,717 filings recorded in January 2023, and there were 14,871 individual Chapter 13 filings in January 2024, a 9% increase compared with the 13,678 filings from last January.

Overall commercial bankruptcy filings rose 21% in January, with the 2,092 filings ticking up from the 1,728 filings in January 2023. There were 460 commercial Chapter 11 filings recorded in January 2024, a 22% increase from the 378 commercial Chapter 11 bankruptcy filings in January 2023. Small business filings, captured as Subchapter V elections within Chapter 11, increased 43% to 176 in January, up from 123 in January 2023.

“As expected, the upward trend of bankruptcy filing volumes persist into the new year and we expect that trend to continue, particularly as the spring tax season concludes,” Michael Hunter, vice president of Epiq AACER, said.  “High interest rates, price fatigue and the pandemic-era excess consumer savings depletion are all contributing factors to the increases now and into 2024.”

“Households and businesses continue to adjust to sustained high interest rates, persistent inflation and more stringent lending terms,” Amy Quackenboss, executive director of the American Bankruptcy Institute, said. “While not at the levels recorded prior to the pandemic, we anticipate that the steady increase in bankruptcies will continue this year.”

Adding to challenges faced by small businesses, the debt eligibility limit of $7.5 million for businesses looking to elect Subchapter V reorganization under Chapter 11 is due to sunset back to $2,725,625 in late June. The ABI’s Subchapter V task force on transmitted a report supporting the continuation of the $7.5 million debt cap for Subchapter V eligibility to Congress in December. The task force’s preliminary report was the result of nine months of public hearings, roundtable discussions and an industry survey inviting comment on Subchapter V.

Total and individual bankruptcy filings in January increased slightly compared with December’s filing totals, while commercial filings decreased slightly. Total bankruptcies increased 6% from December’s 34,481 filings, and consumer bankruptcies edged up 7% compared with December’s total of 32,403. Individual Chapter 7 filings increased 5% and Chapter 13 filings increased 9% from December’s filings. Conversely, commercial Chapter 11 filings decreased 10% from December’s 508 filings. Overall commercial filings increased 1% from the 2,078 filings registered in December. Subchapter V elections within Chapter 11 decreased 12% from the 200 filed in December.