How Many Americans Filed Bankruptcy This Year? (2026)
Consumer bankruptcy filings rose 12% year-over-year in 2026-Q1, according to U.S. Courts and the American Bankruptcy Institute. Chapter 7 liquidations are climbing faster than Chapter 13 repayment plans — the Wipeout Ratio stands at 1.75 (2026-Q1). The composition shift is the signal worth watching.
What Are the Current Bankruptcy Statistics?
U.S. consumer bankruptcy filings rose 12% year-over-year as of 2026-Q1, the 8th consecutive quarter of annual increases. Chapter 7 liquidation filings changed 15.3%, while Chapter 13 repayment plans changed 6.3%. The Wipeout Ratio — Chapter 7-to-Chapter 13 filings — stands at 1.75, and the all-loan charge-off rate is 0.57%.
Here is what the headline number misses. Bankruptcy filings are rising, yes. But the composition of those filings is shifting in a way that tells a different story than "pandemic suppression unwinding." Chapter 7 — the option where everything gets wiped because there is nothing left to reorganize — is accelerating faster than Chapter 13, where borrowers still have income to work with. That compositional shift is the signal worth watching. The American Distress Index currently reads 44.6 (Typical). On average, its inputs sit higher than in 45% of their own quarterly histories since 2005. See the full discharge and means test definitions.
At a Glance
The American Distress Index currently reads 44.6 (Typical). On average, its inputs sit higher than in 45% of their own quarterly histories since 2005. Bankruptcy filings are the terminal confirmation of the pattern the ADI tracks. When savings erode, delinquencies follow. When delinquencies persist, legal defaults are the result. Rising filings — particularly the accelerating shift toward Chapter 7 liquidation — show debt distress converting into permanent household financial failure. Servicer practices shape how many delinquencies become bankruptcies: Wells Fargo, Ocwen/Onity Group, and Citibank have faced CFPB enforcement actions for servicing failures that pushed borrowers toward bankruptcy rather than modification. See all 76 servicer profiles for enforcement histories.
How Fast Are Bankruptcy Filings Rising?
Consumer bankruptcy filings rose 12% year-over-year in 2026-Q1, extending what is now the 8th consecutive quarter of annual increases. This is not a temporary correction from pandemic lows — it is a sustained, compounding trend that has outlasted every "transitory" explanation.
The pandemic era artificially suppressed filings through a combination of stimulus payments, eviction moratoriums, and student loan pauses. That support has fully unwound — student loan delinquency has surged since repayment resumed. Current filing rates have returned to — and in some categories surpassed — pre-pandemic levels, now compounded by sustained high interest rates and savings buffers depleted during the 2022-2023 inflation shock.
Bankruptcy Filings Year-over-Year Change (%)
Source: U.S. Courts / American Bankruptcy Institute.
Full data and trend: Bankruptcy Filings indicator page
Are More People Filing Chapter 7 or Chapter 13?
Chapter 7 filings — total liquidation, where all qualifying debt is erased — rose 15.3% year-over-year in 2026-Q1. Chapter 13 filings — structured repayment plans — increased 6.3% over the same period, a notable deceleration from the 5.4% growth rate the prior year.
I think the chapter split is where the real story lives. Chapter 7 is the option of last resort — total liquidation, where all qualifying debt is erased because the filer has no disposable income to repay creditors. Chapter 13, the structured repayment plan, implies the filer still has income to reorganize around. That Chapter 7 growth is accelerating while Chapter 13 decelerates tells you something specific about where households are in the distress pipeline. These are the same people eating into retirement savings at triple the pre-pandemic rate. By the time they reach the courthouse, there is nothing left to reorganize. The restructuring option assumes disposable income. The data says it is not there.
Chapter 7 and Chapter 13 Filings YoY Change (%)
Source: U.S. Courts Bankruptcy Statistics.
Full data: Chapter 7 | Chapter 13 indicator pages
What Does the Chapter 7-to-13 Ratio Tell Us?
The ratio of Chapter 7 to Chapter 13 filings — what we call The Wipeout Ratio — stood at 1.75 in 2026-Q1. This means for every household choosing a structured repayment plan, nearly 1.8 are choosing total liquidation.
The ratio bottomed at 1.38 in 2023, when pandemic-era debt restructuring surged and liquidation fell. Its climb since then tracks the exhaustion of household financial buffers documented elsewhere in the ADI — savings rates at historic lows, credit card balances at record highs, hardship withdrawals accelerating.
Here is what keeps coming back to me about the Wipeout Ratio. It is the legal system's translation of what the financial data already shows. Savings deplete. Then credit cards max out. Then the delinquency shows up in the bank data. And then, quarters later, the bankruptcy court sees the same person — but now they are choosing liquidation instead of reorganization. The ratio is a lagging indicator by design. By the time it moves, the damage is already done.
Chapter 7-to-Chapter 13 Filing Ratio
Source: U.S. Courts Bankruptcy Statistics.
Full data and trend: The Wipeout Ratio indicator page
How Much Debt Are Banks Writing Off?
The charge-off rate on all loans and leases at commercial banks was 0.57% in 2026-Q1, according to the Federal Reserve via FRED. Charge-offs represent debt that banks have permanently written off — the financial system's formal acknowledgment that these borrowers will not recover.
The trajectory is worth sitting with. This rate has more than tripled from the pandemic-era trough of 0.19% and now exceeds the pre-pandemic baseline of 0.48%. The financial crisis peak of 3.14% in 2009 remains distant, but that comparison can be misleading. The direction matters more than the distance from a peak. Three consecutive years of climbing charge-offs means the banking system is acknowledging, quarter after quarter, that an expanding share of consumer debt will never be repaid. Delinquency data signaled this quarters earlier. Charge-offs are the confirmation. For the full cross-loan-type view, see the default rates comparison hub.
Charge-Off Rate on All Loans (All Commercial Banks)
Source: Board of Governors of the Federal Reserve System via FRED (CORALACBN).
Full data and trend: Charge-Off Rate on All Loans indicator page
Data Sources and Methodology
U.S. Courts / American Bankruptcy Institute
Consumer bankruptcy filing data reported quarterly by federal fiscal year (October-September). Includes total filings, Chapter 7 liquidation, and Chapter 13 repayment plan breakdowns. The Wipeout Ratio is calculated from these chapter-level counts.
Federal Reserve Board / FRED
All-loan charge-off rate (CORALACBN) measures debt permanently written off by commercial banks as uncollectable. Quarterly frequency, sourced from bank call reports. Serves as a financial system proxy for realized bankruptcy losses.
American Distress Index
Bankruptcy filings and charge-off rates serve as lagging confirmation within the ADI framework — they validate that debt stress measured through delinquency rates is producing actual defaults. Full methodology on the methodology page.
Frequently Asked Questions
How many bankruptcies are filed per year in the United States?
The American Bankruptcy Institute and the Administrative Office of the U.S. Courts reported approximately 480,000-500,000 consumer bankruptcy cases for calendar year 2025 (figure published February 2026). Filings have risen year-over-year for 8 consecutive quarters after pandemic-era suppression from stimulus payments, eviction moratoriums, and student loan pauses.
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
Chapter 7 is liquidation bankruptcy — qualifying debts are erased entirely, but non-exempt assets may be sold. Chapter 13 is a repayment plan — the filer keeps assets but repays creditors over 3-5 years. Chapter 7 filings changed 15.3% year-over-year in 2026-Q1, while Chapter 13 changed 6.3%. The growing preference for Chapter 7 signals that more households lack the income to restructure.
Is bankruptcy increasing in 2026?
Yes. Total bankruptcy filings rose 12% year-over-year as of 2026-Q1, marking the 8th consecutive quarter of annual increases. The trend reflects the unwinding of pandemic-era support combined with sustained high interest rates and depleted household savings buffers.
What is the Wipeout Ratio?
The Wipeout Ratio is American Default Research's name for the Chapter 7-to-Chapter 13 filing ratio. It currently stands at 1.75, meaning for every household choosing a structured repayment plan, nearly 1.8 are choosing total liquidation. A rising ratio indicates that more filers have no disposable income to repay creditors — they have nothing left to reorganize.
How does bankruptcy connect to the American Distress Index?
Bankruptcy filings are context for the ADI's Default & Legal domain, which tracks the same terminal stage of distress through credit card charge-offs and foreclosure activity. The ADI currently reads 44.6 (Typical). On average, its inputs sit higher than in 45% of their own quarterly histories since 2005. Rising filings — especially the shift toward Chapter 7 liquidation — show debt distress converting into permanent household financial failure.