Business Bankruptcies Up 72%: Professor Explains the Crisis

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Updated on October 2, 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

The numbers are startling: Chapter 11 business bankruptcies have spiked by 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.

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 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.

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.

The YouTube version of this blog post can be seen by clicking this link.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

You can find additional categories by clicking below or by using the search feature at the top of this page:

• Bankruptcy
• Insights & Analysis

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

Updated on:

• Updated on December 20, 2024.
• Updated on September 28, 2025.