Chapter 11 Bankruptcies Soar: Analyzing the 2026 Surge

The bankruptcy landscape has shifted dramatically. While the headlines often focus on massive corporate collapses, the underlying data reveals a broader economic “normalization” as we move into 2026. Chapter 11 filings, often the canary in the coal mine for economic distress on the whole, recently peaking with a 72% year-over-year increase in large-scale filings.

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

Updated on January 11, 2026.

Why Chapter 11 Matters for Individuals

Chapter 11 is not just for corporations. It serves as a vital tool for high-net-worth individuals whose debts exceed the statutory limits for Chapter 13. As property values and personal liabilities surged through 2025, more individuals found themselves forced into the more complex Chapter 11.

The Brick-and-Mortar Evolution

We are witnessing a fundamental restructuring of the American marketplace and how we shop. The “Post-Pandemic Pivot” of online shopping is now permanent:

• Digital Dominance: Consumer habits have permanently shifted online, leaving traditional brick-and-mortar retailers with unsustainable leases.
• Interest Rate Lag: The “higher-for-longer” rate environment of 2024–2025 has depleted the cash reserves of businesses that relied on cheap debt.
• The Reorganization Reality: Chapter 11 allows these businesses to shed unprofitable locations and reduce debt.

2025 Year-End Snapshot: By the Numbers

According to the latest data from EPIQ AACER and the Federal Reserve, the trend is accelerating with bankruptcy filings across the board, from large businesses, mom and pop businesses, to consumers.

According to the latest data from EPIQ AACER and the Federal Reserve, the trend is accelerating with bankruptcy filings across the board, from large businesses, mom and pop businesses, to consumers.

• Commercial Chapter 11s: Large-firm filings hit a 15-year high late last year.
• Subchapter V Surge: Small business reorganizations (Subchapter V) rose by 11% in 2025 as “small businesses struggled with rising labor and inventory costs because of the tariffs.
• Consumer Impact: Personal Chapter 7 filings increased by 15% in 2025, fueled by record credit card debt and the resumption of student loan collections.

The Professor’s Note: The difference between the chapters and telling. In Chapter 7 bankruptcy, a business is liquidating, selling all its assets, and closing its doors for good. The liquidation process is handled by the trustee, who uses the funds to pay creditors.

In Chapter 11, the goal of the business is to remain operational. For consumers, the choice between these chapters often determines whether they can keep non-exempt property or must surrender it to a trustee.

To learn more about the effects of filing for bankruptcy and owning a business, please read this prior article.

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.

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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.

Updated initially on January 30, 2025.