Business Bankruptcies Up 72%: Prof. Alex Explains the Crisis

The numbers are startling: Chapter 11 business bankruptcies have spiked over 72%. But the real story isn’t just about corporate failures like Bed Bath & Beyond or WeWork; it’s about the economic pressure trickling down to your wallet.

Is your financial situation next on the list? As a bankruptcy lawyer and professor, I can tell you that the corporate crisis and the $1.3 Trillion Credit Card Problem are deeply connected. I anticipated this wave, and this post explains what’s happening and what you need to know.

Updated on December 20, 2024.

Updated on September 28, 2025.

Key Points

• Chapter 11 Business Filings: ↑ Over 72%
• Chapter 7 Business Liquidations: ↑ 19%
• Personal Filings (Ch. 7 & 13): ↑ 18%
• This is a direct result of brick-and-mortar companies failing to adapt to the online economy, and an expected ‘cleansing’ post-pandemic. I knew this was coming

Key Findings: The Bankruptcy Surge

Data published by EPIQ—the system lawyers (including myself) use to file with trustees and courts—confirms the crisis is deepening:

• Chapter 11 Business Filings: Up Over 72%
• Chapter 7 Business Liquidations: Up 19% (to 25,627)
• Personal Filings (Ch. 7 & 13): Up 18%

• The 1.3 Trillion Dollar Credit Card Problem

The Takeaway: This surge is a direct result of brick-and-mortar companies failing to adapt to the online economy, combined with an expected “cleansing” post-pandemic. I knew this was coming.

Corporate Crisis and Consumer Connection

We have been seeing a substantial increase in bankruptcy filings post-COVID. Some of the popular companies we all know—such as Rite Aid, Party City, Bed Bath & Beyond, David’s Bridal, SmileDirectClub, and WeWork—have all filed for bankruptcy protection.

Unfortunately, this was expected. But it’s not just big businesses; the Federal Reserve’s own reports have concluded the same trend with individual filings (Chapter 7 and Chapter 13). Even consumer credit card debt is at an all-time high. (You can read my separate post on The $1.3 Trillion Dollar Credit Card Problem.)

The COVID-19 Effect: Forbearance and The Debt Cliff

Forbearance was not forgiveness; the debt was just moved. A homeowner who paused their mortgage for six months, for instance, didn’t have five years left, but five years and six months.

Now, as creditors push to collect these deferred balances, many debtors who haven’t financially recovered are facing a severe squeeze. This has led to a sharp rise in national credit card balances, increased defaults, and, ultimately, a spike in consumer bankruptcy filings.

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• Bankruptcy
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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.