Consumer bankruptcies

Consumer bankruptcies in the United States are projected to decrease by -0.1% in 2025, reaching an estimated 519,486 cases. Though bankruptcies have grown throughout the period because of inflation and high interest rates, household budgets have largely remained resilient. During the pandemic, relief programs provided financial buffers, while resilient consumer spending prevented a significant economic downturn.

Over the five years to 2025, consumer bankruptcies have experienced significant volatility, however, influenced by evolving macroeconomic and policy conditions. Sharp decreases in 2021 and 2022 were due to government stimulus and relief measures in response to COVID-19, with filings dropping 15.1% in 2021 and another 17.1% in 2022. These interventions provided temporary financial cushions. However, 2023 and 2024 saw a reversal, with filings rising by 9.5% and 15.3%, respectively, driven by rapid interest rate increases that raised borrowing costs and persistent inflation that elevated living costs. The end of relief programs, high household debt, and resumed student loan repayments in late 2023 further heightened consumer financial stress, reflected in rising delinquency rates.

Legal and social dynamics have continued to influence this period. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, making filing more complex and costly, acted as a deterrent but was repeatedly outweighed by macroeconomic distress. Regional disparities, including differences in legal culture and local economic conditions, remained relevant, affecting bankruptcy rates nationwide.

By the end of this period, high household debt levels, elevated interest rates, inflationary pressures and depleted consumer savings have contributed to more personal bankruptcies despite post-pandemic economic growth. The interplay between policy support, macroeconomic trends, and household financial resilience has shaped the fluctuations in consumer bankruptcy filings over these five years.